Bloomberg News

Australia Stocks Rise as Commodity Prices Gain on Europe Pledge

October 10, 2011

Oct. 11 (Bloomberg) -- Australian shares rose, led by commodity producers as oil and metal prices surged after German and French leaders pledged to stem Europe’s sovereign-debt crisis. Japanese stock futures advanced.

BHP Billiton Ltd., the world’s No. 1 mining company, advanced 1.1 percent in Sydney, while Rio Tinto Group, the second-largest miner by sales, rose 2 percent. American depositary receipts of Mitsubishi Corp., which gets 43 percent of its revenue from commodities trading, rose 1.1 percent from the last closing price in Tokyo. Chinese banks may be active in Hong Kong after state-run Central Huijin Investment Ltd. said it began buying shares in the nation’s four biggest lenders following a drop in valuations below levels reached during the global financial crisis.

Australia’s S&P/ASX 200 Index gained 0.7 percent to 4,232 as of 10:23 a.m. in Sydney. New Zealand’s NZX 50 Index rose 0.6 percent in Wellington. Japanese markets, which were closed for a public holiday yesterday, will resume trading today. Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,790 in Chicago yesterday, compared with 8,590 in Osaka, Japan, on Oct. 7. They were bid in the pre-market at 8,730 in Osaka at 8:05 a.m. local time.

“There is hope that if a comprehensive European bank package is announced, the damage on the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”

Europe Debt

The MSCI Asia Pacific Index gained 0.2 percent as commodity prices advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3.

The MSCI Asia Pacific Index dropped 17 percent this year through yesterday, compared with a 5 percent loss for the S&P 500 and a 14 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.6 times estimated earnings on average, compared with 12 times for the S&P 500 and 10 times for the Stoxx 600.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. In New York yesterday, the gauge rose 3.4 percent, its biggest rally since August, with all 10 industry groups advancing. The S&P 500 last week rebounded from the threshold of a bear market on optimism Europe will tame its debt crisis and after U.S. economic data improved. The Stoxx Europe 600 Index posted the biggest four-day gain since 2008 yesterday.

Copper, Oil

Copper futures for December delivery climbed 2.9 percent on the Comex in New York yesterday and gold futures rose 2.1 percent, while crude oil for November delivery gained 2.9 percent. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum added 1.7 percent, capping three straight days of gains.

In China, Central Huijin started acquiring stock in Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd., according to a statement on its website. The fund will continue with “related market operations,” it said, without providing further details.

--Editor: John McCluskey.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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