Bloomberg News

Asian Stocks Rise as Europe Plan, U.S. Fed Buoy Recovery Hopes

October 13, 2011

Oct. 13 (Bloomberg) -- Asian stocks rose for a sixth day as European leaders edged closer to a plan for taming the debt crisis and the U.S. Federal Reserve said it discussed more asset purchases, reducing concern about the global economy.

HSBC Holdings Plc, Europe’s biggest lender, climbed 3.3 percent after the European Commission called for a “coordinated approach” to recapitalize the region’s banks. BHP Billiton Ltd., the world’s No.1 miner, gained 1.5 percent in Sydney after metal prices rose yesterday. Esprit Holdings Ltd. jumped 16 percent in Hong Kong after the clothier refuting claims it overstated the number of its Chinese stores.

The MSCI Asia Pacific Index climbed 1.3 percent to 117.71 as of 8:04 p.m. in Tokyo, taking its advance in the past six days to 9.7 percent. The gauge climbed this week after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize banks and address Greece’s debt crisis.

“The market’s taken a glass-half-full approach in the last couple of weeks,” said Matt Riordan, who helps manage close to $6.6 billion in Sydney at Paradice Investment Management Pty. “With Europe, it’s all going to come down to the final details. A resolution will require a lot of money, the agreement of a large number of parties, and the political will to enforce structural change.”

Australian Jobs

Japan’s Nikkei 225 Stock Average gained 1 percent. Australia’s S&P/ASX 200 Index also added 1 percent as a report showed the nation’s unemployment rate declined for the first time since March as employers added double the workers economists forecast.

South Korea’s Kospi Index advanced 0.8 percent. Hong Kong’s Hang Seng Index climbed 2.3 percent and the Shanghai Composite Index added 0.8 percent.

The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong jumped 3.7 percent after the Chinese government announced measures to help small companies hurt by the nation’s tighter monetary policies, including tax breaks and easier access to bank loans.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. The S&P 500 advanced 1 percent in New York yesterday, while the Stoxx Europe 600 Index climbed 1.7 percent to a two-month high as Olli Rehn, the European Commission’s economic and monetary affairs commissioner, said the region’s debt crisis can be resolved.

Separately, Federal Reserve officials last month wanted to keep further asset purchases as an option to boost the economy as policy makers saw “considerable uncertainty” that U.S. growth will pick up, the Fed said in minutes of its Sept. 20-21 meeting.

Higher Bank Capital

Financial stocks surged after European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes. Barroso urged a “coordinated approach” to deliver a “significantly higher capital ratio of highest quality capital” for banks, while offering government funds only as a last resort.

HSBC gained 3.3 percent to HK$64.65. Standard Chartered Plc, U.K.’s third-largest lender, climbed 4 percent to HK$176.60. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, advanced 2.1 percent to 340 yen.

‘Hoping For Agreement’

“Investor hope that Europe’s leaders can agree on a credible solution, coupled with a succession of positive days in the market, are seeing underweight equity-investors forced to increase their buying,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.

Mining companies also climbed. BHP Billiton rose 1.5 percent to A$37.64 in Sydney. Rival Rio Tinto Group advanced 2.8 percent to A$69.34. Korea Zinc Co. gained 2.7 percent to 307,000 won in Seoul.

New York-traded copper futures climbed 3.1 percent yesterday, while the London Metal Exchange Index of prices for six metals including copper and aluminum gained 2.4 percent. Copper fell in trading today.

Iluka Resources Ltd. surged 9.6 percent to A$16.99 in Sydney after the world’s biggest zircon producer reported that third-quarter sales more than doubled after it boosted production.

Mazda Motor Corp. surged 4.5 percent to 163 yen in Tokyo. Construction-machinery maker Komatsu Ltd. climbed 4.4 percent to 1,770 yen and Fanuc Corp., a manufacturer of industrial robots, increased 3.4 percent to 11,970 after a report showed machine tool orders increased 20 percent in September from a year earlier.

Esprit Rebounds

The MSCI Asia Pacific Index dropped 16 percent this year through yesterday, compared with a 4 percent loss by the S&P 500 and a 13 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 10.2 times for the Stoxx 600.

Esprit Holdings, Hong Kong’s biggest clothing retailer, jumped 16 percent to HK$11.78 in Hong Kong. The company said outdated information on its website may have led Hong Kong-based Next Magazine to conclude it overstated the number of company stores in China.

Chinese automakers rose in Hong Kong after Citigroup Inc. analysts said China’s September car sales probably grew 9 percent from a year earlier. Citigroup also said a slowdown in China sales will likely end in the first quarter of next year.

BYD Co., the automaker backed by billionaire investor Warren Buffett, jumped 14 percent to HK$14.98. Dongfeng Motor Group Co., which operates ventures with Nissan Motor Co. and Honda Motor Co. in China, climbed 7.1 percent to HK$12.98.

Chinese steelmakers also rose. Maanshan Iron & Steel Co., China’s fourth biggest manufacturer of the material, surged 26 percent to HK$2.31 in Hong Kong and Angang Steel Co. jumped 16 percent to HK$5.65 after UBS AG boosted its recommendation on their Hong Kong-traded shares to “buy,” saying the stocks were undervalued.

--With assistance from Satoshi Kawano in Tokyo. Editors: Jason Clenfield, John McCluskey

To contact the reporters 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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