Asian Stocks Advance, Led by BHP on Higher Oil; Banks Rebound

By Chua Kong Ho and Shani Raja

July 11 (Bloomberg) -- Asian stocks rose, snapping a four- week loss, as commodity producers climbed along with metals prices and the New York Times reported the U.S. government may act to prevent defaults by Fannie Mae and Freddie Mac.

BHP Billiton Ltd. and Mitsubishi Corp. climbed after oil jumped more than $5 a barrel yesterday and zinc advanced the most since February. Mizuho Financial Group Inc. led banks higher after the New York Times said the government may take over the two largest buyers of U.S. home loans and guarantee their debt, reducing the risk of further credit-market losses.

``People are comforted to see that some action is being taken,'' said Angus Gluskie, who helps oversee the equivalent of $500 million at White Funds Management in Sydney. ``It eliminates one of the risks that they're concerned about: the risk that we'll get a breakdown of a big player in the marketplace.''

The MSCI Asia-Pacific Index rose 0.5 percent to 132.94 at 2:45 p.m. Tokyo time, reversing a drop of 0.7 percent.

Japan's Nikkei 225 Stock Average gained 0.1 percent to 13,081.50. Most Asian benchmark indexes rallied after the New York Times report.

The MSCI Asian gauge slumped 12 percent in the past four weeks as oil climbed to a record, eroding earnings and deterring consumer spending, and as concerns over subprime losses rekindled. The world's largest banks and securities firms have posted writedowns and credit losses of more than $400 billion as the U.S. housing market collapsed, sparking turmoil in financial markets.

U.S. stocks rose yesterday, helping the Standard & Poor's 500 index rebound from a two-year low. Futures for the index declined 0.1 percent today.

Commodities Rally

BHP rose 3.3 percent to A$40.07 in Sydney, while rival Rio Tinto Group climbed 2.7 percent. Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, gained 4 percent to A$60.20, the most since May 29.

Newcrest Mining Ltd., the largest Australian gold mining company, jumped 4.1 percent to A$31.05, as the price of the precious metal climbed in Shanghai and Tokyo. Jiangxi Copper Co., China's second-biggest producer of the metal, advanced 1.4 percent to HK$15.60 in Hong Kong.

Mitsubishi Corp., which gets half of its profit from commodities, advanced 2.2 percent to 3,250 yen. Mitsui & Co., for which energy trading is the second-biggest contributor to profit, rose 1.2 percent to 2,120 yen.

Oil climbed $5.60 a barrel to $141.65 in New York yesterday, the biggest one-day increase since June 6, and was at $141.92 at 2:45 p.m. in Tokyo. A measure of six metals traded on the London Metal Exchange advanced 1.7 percent. Zinc rose 6.7 percent, copper 0.2 percent and nickel 2.1 percent.

Alumina Jumps

Alumina Ltd., a partner in the world's largest producer of the material used to make aluminum, surged 7.6 percent to A$4.55, the most in five months and the third-biggest percentage gain on MSCI's Asian gauge. Chinese smelters agreed to cut output of the metal by as much as 10 percent, sending prices to a record.

Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, gained 7.4 percent to HK$9.46. Midwest Corp., a Perth-based iron ore mining company, added 0.9 percent to A$6.46, after Sinosteel Corp. won control in the biggest overseas mining takeover by a Chinese company.

Kenmec Mechanical Engineering Co. climbed 7 percent to NT$42.10, the daily limit, in Taipei trading after its solar-cell unit agreed to a 10-year supply of raw materials and said it may sell shares to MEMC Electronic Materials Inc.

`Toxic Waste'

``Equity owners are asking, `What do I need to hold?' and the answer is, `More hard commodities, less financials,''' said Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which manages about $128 billion. ``The banks are suffering from America's toxic waste.''

Mizuho Financial climbed 2.7 percent to 540,000 yen, reversing a 1.7 percent loss. Mitsubishi UFJ Financial Group Inc., the largest Japanese bank by value, gained 1.3 percent to 1,001 yen, rebounding from a 3.3 percent decline. National Australia Bank Ltd., which today said it may have to increase provisions for credit-related investments, pared its decline to 0.7 percent.

Financial stocks as a group surged after the New York Times report, which cited unidentified U.S. government officials briefed on the plan to place Fannie Mae and Freddie Mac under conservatorship.

``It goes to show how fragile the financial world is at the moment,'' said Stewart Paterson, joint managing director at Singapore-based hedge fund Riley Paterson Investment Management. ``Nationalization of the financial system is not a good thing.''

To contact the reporter for this story: Chua Kong Ho at in Shanghai or kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.