Asian Stocks Gain for Third Day as Credit, Oil Concerns Retreat

By Chua Kong Ho and Shani Raja

July 23 (Bloomberg) -- Asian stocks rose for a third day after Macquarie Group Ltd. said it made a ``solid'' start to the year, boosting speculation bank earnings will withstand tighter global credit markets.

Macquarie, Australia's biggest securities firm, climbed the most in almost four months. Toyota Motor Corp. and Korean Air Lines Co. advanced after oil dropped more than $3 a barrel. Komatsu Ltd., the world's No. 2 maker of earthmovers, rose after rival Caterpillar Inc. raised its 2008 sales forecast.

The MSCI Asia Pacific Index gained 1.1 percent to 134.41 as of 10:30 a.m. in Tokyo, taking its three-day rally to 4.1 percent. About six stocks gained for each that declined today.

The MSCI index has lost 15 percent this year, part of a global slump in equities that has erased more than $12.8 trillion from an October record, as oil prices soared and the world's largest banks and securities firms reported more than $467 billion of writedowns and credit losses.

``There are a few detractors out there who think there's a lot more pain to be borne, but today they're losing,'' said Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which holds about $128 billion of assets. ``Oil price declines take the pressure off interest rate rises if they're sustained, and that's good for the banks.''

Japan's Nikkei 225 Stock Average climbed 0.9 percent to 13,306.90. Chugai Pharmaceutical Co., the Japanese unit of Roche Holding AG, climbed the most in almost a month after Credit Suisse Group raised its rating to ``neutral.''

Australia's S&P/ASX 200 Index gained 1.2 percent and South Korea's Kospi Index advanced 1.4 percent.

Bank Rally

U.S. stocks rallied yesterday, sending the Standard & Poor's 500 Index 1.4 percent higher. Wachovia Corp., Bank of America Corp. and SunTrust Banks Inc. helped lenders extend their rebound from last week's nine-year low after Deutsche Bank analyst Mike Mayo said bank losses haven't spread ``as much as feared.'' Futures on the S&P 500 were little changed today.

``Earnings at U.S. financial companies aren't good but they're not the worst,'' said Naoki Fujiwara, who oversees the equivalent of $720 million as chief fund manager at Tokyo-based Shinkin Asset Management Co. ``Concern the situation will worsen has eased and the global financial market seems to have got out of the critical situation.''

Macquarie, which posted its slowest profit growth in two years in May due to writedowns on its European assets, gained 6.9 percent to A$49.80, the most since April 2.

`Relatively Well'

Chief Executive Officer Nicholas Moore said ``Macquarie's businesses are performing relatively well despite market conditions deteriorating since this time last year,'' according to a statement before an annual shareholder meeting in Melbourne.

Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, advanced 2.4 percent to 1,010 yen, the biggest gainer on the MSCI Asian gauge. Mizuho Financial Group Inc., Japan's No. 2 bank by assets, climbed 3.2 percent to 577,000 yen. National Australia Bank Ltd., the nation's largest bank, climbed 3.3 percent to A$28.55.

The cost of protecting Japanese and Australian corporate bonds from default declined, according to traders of credit- default swaps. The Markit iTraxx Japan index fell 9 basis points to 122 as of 9:05 a.m. in Tokyo, according to prices from Morgan Stanley.

A measure of financial stocks led gains among the regional index's 10 groups, contributing to 63 percent of the advance.

Automakers, Airlines

Toyota gained 1.2 percent to 4,970 yen. The Nikkei newspaper reported today that the Japanese automaker's first-half sales fell 7 percent in North America and Europe due to soaring gasoline costs, citing an unidentified company official.

Honda Motor Co. climbed 2.8 percent to 3,700 yen and Nissan Motor Co. added 1.6 percent to 854 yen.

The yen depreciated to as much as 107.45 in New York, the weakest since July 9, from 106.51 at the close of stock trading in Tokyo yesterday. A weaker yen boosts the value of Japanese companies' overseas sales when converted into local currency.

Korean Air Lines, South Korea's largest airline, gained 4.5 percent, the most in almost a week, to 47,500 won. Air New Zealand Ltd. rose 2.6 percent to NZ$1.18 in Wellington. Qantas Airways Ltd., Australia's biggest carrier, gained 2.7 percent to A$3.48 in Sydney.

Crude oil for August delivery dropped $3.09 a barrel to $127.95 a barrel yesterday, the lowest price since June 5. Oil was recently at $128.12 in after-hours trading.

Komatsu climbed 2.6 percent to 2,960 yen, the highest since June 27. Caterpillar, the world's largest maker of earthmoving equipment, raised its 2008 sales forecast after second-quarter profit climbed 34 percent to a record $1.11 billion, on demand for backhoes and mining tolls in China and the Middle East.

``Concerns over commodity prices, oil in particular, have gone away to some extent,'' said Beat Lenherr, who oversees more than $20 billion of assets as Singapore-based chief global strategist at LGT Capital Management. ``It's now primarily a question of confidence in the financial sector and once that confidence is restored, we'll see equities bounce back extremely quickly.''

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