Bloomberg News

Asian Stocks Rise as Berlusconi Offers to Quit, China CPI Eases

November 09, 2011

Nov. 9 (Bloomberg) -- Asian stocks rose for the first time in three days as Italian Prime Minister Silvio Berlusconi’s offer to resign bolstered optimism Europe may find a way to contain its debt crisis, and China’s inflation rate eased.

Industrial & Commercial Bank of China Ltd. led a rally among Chinese lenders higher in Hong Kong as the nation’s inflation rate moderated to 5.5 percent last month. Westpac Banking Corp., Australia’s second-largest lender by market value, gained 1.2 percent in Sydney as Australian home-loan approvals rose more than estimated in September. Inpex Corp., Japan’s biggest energy explorer, rose 2.7 percent in Tokyo after crude oil futures jumped to a three-month high.

“The markets will take the near-term resolution of political uncertainties in Europe positively,” said John Woods, Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “Now that we see inflation easing, it suggests that Asian central banks can switch to a more pro-growth strategy.”

The MSCI Asia Pacific Index increased 1.4 percent to 120.83 as of 11:11 a.m. in Tokyo, with almost five stocks rising for each that fell on the gauge. The measure sank 3.6 percent last week after Greece announced plans to hold a referendum on Europe’s rescue package. The sovereign-debt crisis has stirred political dramas across the region, with Berlusconi offering to resign just days after Greek Prime Minister George Papandreou stepped down.

Japan’s Nikkei 225 Stock Average rose 0.9 percent. South Korea’s Kospi Index added 0.4 percent. Hong Kong’s Hang Seng Index climbed 2.1 percent, while China’s Shanghai Composite Index gained 0.3 percent. Australia’s S&P/ASX 200 climbed 1.4 percent.

‘Taming Political Risks’

Futures on the Standard & Poor’s 500 Index were little changed today. In New York, the index advanced 1.2 percent yesterday as Berlusconi agreed to quit after the Italian parliament next week approves austerity plans promised to European partners. The announcement came after the premier yesterday failed to muster an absolute majority on a routine parliamentary ballot.

“A change in premiership is going to tame political risks somewhat because criticism against Berlusconi was strong,” said Ayako Sera, a market strategist at Sumitomo Trust & Banking Co. in Tokyo, which manages the equivalent of $322 billion. “Berlusconi’s resignation gives a short-term positive for the market, while the focus switches to austerity measures.”

The MSCI Asia Pacific Index declined 13 percent this year through yesterday, compared with a 1.5 percent gain by the S&P 500 and a 13 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.4 times for the Stoxx 600.

A gauge of raw-material produces led the advance among the 10 industry groups in the regional benchmark index. Crude oil for December delivery rose $1.28 to $96.80 a barrel yesterday on the New York Mercantile Exchange, the highest settlement since July 28.

--With assistance from Masaaki Iwamoto in Tokyo. Editors: John McCluskey, Nick Gentle

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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