Bloomberg News

Asia Stocks Rise First Day in Five on European, U.S. Optimism

October 06, 2011

Oct. 6 (Bloomberg) -- Asian stocks rose for the first time in five days as better-than-expected U.S. economic data and optimism European leaders will contain the region’s debt crisis boosted the earnings outlook for exporters.

Sony Corp., Japan’s No. 1 exporter of consumer electronics, advanced 4.7 percent in Tokyo. Cathay Pacific Airways Ltd., Asia’s largest international carrier, jumped 6.9 percent in Hong Kong. James Hardie Industries SE, a building-materials supplier that gets almost 70 percent of its sales from the U.S., climbed 8.2 percent in Sydney. BHP Billiton Ltd., the No. 1 global mining company, gained 3.3 percent as commodity prices advanced.

The MSCI Asia Pacific Index rose 3.2 percent to 110.76 as of 6:38 p.m. in Tokyo. About eight stocks advanced for each decliner and all 10 industry groups climbed, led by commodity producers and banks. The gauge tumbled 16 percent in the third quarter, the biggest drop since 2008, amid concern that Europe’s debt crisis and a U.S. economic slowdown will drag the world back into recession.

“The market is a bit more optimistic about prospects for European policy makers to find a solution, particularly with the solvency of European banks,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. The latest U.S. data is “a good sign” that the economy is stabilizing, he said.

Japan’s Nikkei 225 Stock Average gained 1.7 percent. South Korea’s Kospi Index added 2.6 percent. Hong Kong’s Hang Seng Index climbed 5.7 percent, its biggest gain in more than two years. Australia’s S&P/ASX 200 advanced 3.7 percent, the biggest increase since December 2008.

U.S. Reports

Futures on the Standard & Poor’s 500 Index gained 0.6 percent today, erasing losses of as much as 0.4 percent. The S&P 500 climbed 1.8 percent yesterday in New York, increasing for a second day, after a report showed U.S. companies added 91,000 jobs in September. Stocks also rose after the Institute for Supply Management’s non-manufacturing index fell less than forecast. Nasdaq-100 Index futures rebounded to rise 0.1 percent after falling when Apple Inc. said co-founder Steve Jobs died today. He was 56.

“The market sentiment is too pessimistic about the U.S. economy, which hasn’t become that bad,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “We can expect a rebound of stocks.”

The International Monetary Fund said European Union officials are working on plans to boost bank capital. France and Belgium said a “bad bank” will be set up to hold Dexia SA’s troubled assets.

Last Resort

German Chancellor Angela Merkel said Europe’s rescue fund will only be used as a last resort to save banks and that investors may have to take deeper losses as part of a Greek rescue.

HSBC Holdings Plc, Europe’s biggest lender by market value, gained 4.7 percent to HK$59.30 in Hong Kong, while National Australia Bank Ltd., the nation’s largest lender to businesses, surged 5 percent to A$22.87 in Sydney.

Sony advanced 4.7 percent to 1,470 yen in Tokyo. Li & Fung Ltd., a supplier of clothes and toys to Wal-Mart Stores Inc., increased 4.3 percent to HK$12.08 in Hong Kong. Cathay Pacific climbed 6.9 percent to HK$12.70, while in Sydney, James Hardie rose 8.2 percent to A$5.84.

Samsung Electronics Co. increased 1.5 percent to 855,000 won in Seoul and LG Electronics Inc. surged 6.3 percent to 73,900 won on optimism South Korea’s two largest electronics makers will gain market share against Apple.

Commodity Shares

Asian commodity stocks also rallied. BHP Billiton gained 3.3 percent to A$36.30 in Sydney and rival Rio Tinto Group climbed 4.9 percent to A$63.28. Korea Zinc Co., which produces metals including zinc, lead and gold, jumped 6 percent to 246,000 won in Seoul. Cnooc Ltd., China’s largest offshore energy explorer, surged 8.5 percent to HK$12.30.

Crude oil for November delivery gained 5.3 percent on the New York Mercantile Exchange yesterday after the U.S. government reported an unexpected decline in stockpiles in the world’s biggest crude-consuming country. Oil gained as much as 1.8 percent today. The Thomson Reuters/Jefferies CRB Index of raw materials advanced 1.9 percent yesterday, while New York-traded copper futures climbed as much as 4.7 percent today.

The MSCI Asia Pacific Index declined 22 percent this year through yesterday, compared with a 9 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 10.9 times estimated earnings on average, compared with 11.5 times for the S&P 500 and 9.4 times for the Stoxx 600.

--With assistance from Toshiro Hasegawa in Tokyo. Editor: John McCluskey, Jim Powell.

To contact the reporters on this story:

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.


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