Asian Stocks Rise for First Time This Week; Banks Lead Advance

By Chen Shiyin and Patrick Rial

July 17 (Bloomberg) -- Asian stocks rose for the first time this week, lifting the region's benchmark index from a 21-month low, as concern eased that credit losses and near-record fuel costs will erode company profits.

Commonwealth Bank of Australia advanced in Sydney after Wells Fargo & Co., the second-biggest U.S. mortgage lender, reported earnings that topped analyst estimates. Toyota Motor Corp. gained the most in a month in Tokyo after Credit Suisse Group raised its rating on Japanese equities. Korean Air Lines Co. paced a rally among transportation stocks following the biggest two-day drop in crude oil prices since January 2007.

``Wells Fargo's profit came as a positive surprise,'' Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which manages about $94 billion, told Bloomberg Television in an interview. ``There's a feeling now that the market has already taken account of any bad news on financials.''

The MSCI Asia-Pacific Index added 1.5 percent to 131.36 at 10:22 a.m. Tokyo time, halting a three-day, 3.1 percent slump. About five times as many stocks rose as fell. The benchmark, which dropped yesterday to its lowest since October 2006, has lost 17 percent this year.

Japan's Nikkei 225 Stock Average gained 1.1 percent to 12,897.80, and equity indexes advanced in all open markets. Thailand is closed for a holiday.

U.S. stocks rallied yesterday, helping the Standard & Poor's 500 Index rebound from its lowest since 2005. Wells Fargo jumped the most since at least 1980 after reporting profit of 53 cents a share and record revenue of $11.5 billion, leading the S&P 500 Financials Index to a record 12 percent jump.

Banks Gain

Commonwealth Bank, Australia's biggest provider of home loans, jumped 4.1 percent to A$41.65, on course for its largest advance since June 26. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 bank by value, gained 3.7 percent to 961 yen.

The measure of financial companies in the MSCI regional index has tumbled 21 percent this year, the biggest decline among 10 industry groups, as the world's top banks and securities firms reported writedowns and credit losses exceeding $422 billion.

The financial index gained 2.3 percent today, rebounding from its lowest since December 2005.

Toyota, Japan's largest automaker, rose 2.2 percent to 4,740 yen, on course for its steepest advance since June 16. Sony Corp., the world's second-largest maker of consumer electronics, added 3 percent to 4,420 yen. Nomura Holdings Inc., Japan's biggest brokerage, jumped 5.2 percent to 1,534 yen.

Credit Suisse, Japan

Japanese stocks were raised to ``neutral'' from ``underweight'' by Andrew Garthwaite, chief strategist at Credit Suisse Group. Japan's market provides a hedge against inflation, higher oil prices, and turmoil in credit markets, Garthwaite said in a note to clients. The Topix index has lost 14 percent in 2008, making Japan the best-performing market in Asia after Sri Lanka.

Korean Air, South Korea's No. 1 carrier, surged 6.6 percent to 44,250 won. Japan Airlines Corp., the country's biggest, rose 3.8 percent to 220 yen, while Qantas Airways Ltd., Australia's largest, gained 4.7 percent to A$3.32.

Crude oil for August delivery fell 3 percent yesterday in New York after the U.S. Energy Department showed an unexpected gain in supplies. Futures completed a two-day, 7.3 percent slump, the most since January 2007, and were at $134.99 today.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.