Bloomberg News

Japanese Stock Futures Rise as European Debt Concern Ebbs

July 29, 2012

Japanese and Australian stock futures rose amid optimism European policy makers will act to ease the region’s debt crisis, boosting the earnings outlook for exporters.

American Depositary Receipts of Canon Inc. (7751), a camera maker that gets 80 percent of its sales outside Japan, climbed 1.7 percent. ADRs of BHP Billiton Ltd. (BHP), the world’s largest mining company, advanced 1.8 percent as metals prices rose. Bank of Yokohama may be active in Tokyo trading after BNP Paribas SA rated the shares buy in new coverage.

Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 8,690 in Chicago on July 27, up from 8,560 in Osaka, Japan. They were bid in the pre-market at 8,700 in Osaka at 8:05 a.m. local time. Futures on Australia’s S&P/ASX 200 Index advanced 1.1 percent today. New Zealand’s NZX 50 Index rose 0.2 percent in Wellington. Global equities rallied on July 27 after German Chancellor Angela Merkel and French President Francois Hollande said their countries are “bound by the deepest duty” to keep the euro area intact.

“Supportive comments from both Merkel and Hollande were timely,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian unit. The Swiss bank has about $1.5 trillion in assets under management. “There is a strong political and financial will for the euro. Actions that address the EU challenges will create the opportunity for a sustainable rally ahead.”

Europe Action

Asian stocks are poised to join the global rally after two central bank officials said ECB President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases.

Merkel and Monti “agreed that Germany and Italy will do everything to protect the euro area,” German government spokesman Georg Streiter said in an e-mailed statement yesterday in Berlin. Monti agreed to travel to Berlin for talks with Merkel in the second half of August, Streiter said.

Merkel and Italian Prime Minister Mario Monti agreed the European Union’s summit conclusions last month must be implemented “as quickly as possible” after speaking by phone on July 28.

Luxembourg Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance ministers, said the region’s temporary rescue fund and the ECB are preparing to act together to reduce borrowing costs, Sueddeutsche Zeitung reported, citing an interview.

U.S. Growth

In the U.S., data showed the economy expanded at a slower pace in the second quarter as a softening job market prompted Americans to curb spending. Consumer confidence in July dropped to the lowest level this year, according to a separate report. Cooling growth makes it harder to reduce unemployment, helping explain why Federal Reserve Chairman Ben S. Bernanke has said policy makers stand ready with more stimulus if needed.

The MSCI Asia Pacific Index (MXAP) fell 10 percent from this year’s highest level Feb. 29 through July 27 amid concern economies in China and the U.S. are slowing as Europe’s debt crisis deepens. This dragged the value of shares on the regional gauge to 11.7 times estimated earnings, compared with a multiple of 13.5 for the S&P 500 and 11 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The gauge rose last week, capping the S&P 500’s longest rally since March, amid optimism Europe’s policy makers will act to ease the region’s debt crisis and better-than-expected earnings from Caterpillar Inc. to Moody’s Corp.

The Thomson Reuters/Jefferies CRB Index of raw materials climbed 0.7 percent on July 27, a third day of gains.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 2.6 percent to 88.13, its biggest advance in a month.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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