Bloomberg News

Asian Stocks Swing Between Gains, Losses Ahead of Europe Summit

October 21, 2011

Oct. 21 (Bloomberg) -- Asian stocks swung between gains and losses, heading for a weekly drop, on speculation European policy makers will struggle to reach a resolution on how to fight the region’s debt crisis.

Fanuc Corp., a Japanese manufacturer of industrial robots that gets 75 percent of its sales abroad, rose 2.4 percent after an index of manufacturing in Philadelphia unexpectedly increased. Hynix Semiconductor Inc., the world’s second-largest maker of computer memory chips, rose 10 percent in Seoul after a research company said Apple Inc. used the company’s NAND-flash chips in the iPhone for the first time. Mitsui & Co. led losses in Japanese traders as commodity prices headed for the first weekly loss in three weeks.

The MSCI Asia Pacific Index rose 0.2 percent to 115.40 at 7:34 p.m. in Tokyo after falling as much as 0.3 percent. About half of the stocks on the benchmark gauge rose ahead of a European debt summit this weekend. The measure has dropped 1.3 percent this week.

“It looks like European leaders are making progress, but there’s still a long way to go,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The market remains very vulnerable.”

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. The index rose 0.5 percent yesterday in New York after a report that Europe may combine temporary and permanent rescue funds to make as much as 940 billion euros ($1.3 trillion) available to fight the crisis, according to two people familiar with the matter.

Second Summit

Gains were limited on concern European policymakers will struggle to reach a resolution at the Oct. 23 summit. German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement they want agreement on a “comprehensive and ambitious” plan as the European Union prepares for a second summit within three days of this weekend’s meeting.

“There’s a lot of information and a lot of uncertainty whether this weekend’s meeting will come out with a definitive plan or there’s more to come after that,” Colonial’s Halmarick said.

Factory-machinery makers rose after the Federal Reserve Bank of Philadelphia’s general economic index increased to 8.7 from minus 17.5 last month, the biggest one-month rebound in 31 years.

Fanuc gained 2.4 percent to 12,170 yen. Mitsubishi Electric Corp., which makes 25 percent of revenue from factory automation equipment, rose 2.7 percent to 712 yen.

Samsung, Hynix

Japan’s Nikkei 225 Stock Average closed little changed after rising as much as 0.2 percent. Australia’s S&P/ASX 200 lost 0.1 percent. Hong Kong’s Hang Seng Index added 0.2 percent, erasing losses of as much as 0.3 percent.

South Korea’s Kospi Index climbed 1.8 percent on speculation the nation’s earnings will withstand a slowdown in the global economy. Samsung Electronics Co., the world’s second- biggest handset maker, rose 1.1 percent to 917,000 won on a Wall Street Journal report that its smartphone shipments beat Apple Inc’s in the last quarter.

Hynix Semiconductor rose 10 percent to 23,200 won in Seoul after research company IHS iSuppli said Apple used the company’s NAND-flash chips in the iPhone for the first time. LG Display Co., the world’s second-largest maker of liquid-crystal displays, jumped 7.8 percent to 24,250 won after analysts from LIG Investment & Securities Co. and Hyundai Securities Co. said losses will narrow in the current quarter.

STX Slides

STX Pan Ocean Co., South Korea’s largest bulk-shipping line, fell by as much as the daily limit in Seoul trading and affiliates tumbled on speculation group companies may sell stock to help pay debt. STX Pan Ocean dropped as much as 15 percent and fell 10 percent to 6,640 won at the close.

The MSCI Asia Pacific Index declined 16 percent this year through yesterday amid concern Europe’s debt crisis will damage the banking system and U.S. growth is sputtering. That compares with slides of 3.4 percent by the S&P 500 and 16 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.7 times estimated earnings on average, compared with 12.2 times for the S&P 500 and 10 times for the Stoxx 600.

Japanese trading companies fell after the Thomson Reuters/Jefferies CRB Index of raw materials fell 1 percent yesterday, set for a 3 percent weekly loss. Mitsui & Co. dropped 3.3 percent to 1,057 yen, while Mitsubishi Corp. slid 2.5 percent to 1,478 yen, while Itochu Corp. lost 1.8 percent to 731 yen.

--Editors: Nick Gentle, Jason Clenfield

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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


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