Asian Stocks Rise Most in 3 Months as Credit, Oil Concerns Ease

By Chua Kong Ho and Chen Shiyin

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

Macquarie, Australia's biggest securities firm, climbed the most in almost four months. Honda Motor Co. and Korean Air Lines Co. advanced after oil dropped to a six-week low. Komatsu Ltd., the world's No. 2 maker of earthmovers, rose after rival Caterpillar Inc. raised its sales forecast. India's Sensitive Index surged the most in two weeks after Prime Minister Manmohan Singh's government survived a confidence vote in parliament.

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

The MSCI Asia Pacific Index gained 1.9 percent to 135.50 as of 1:54 p.m. in Tokyo, its biggest rise since April 21 and taking a three-day rally to 4.9 percent. About six stocks gained for each that declined as most benchmark indexes rose.

Japan's Nikkei 225 Stock Average climbed 1.3 percent to 13,353.75. Asahi Breweries Ltd., Japan's biggest brewer by sales, advanced after saying first-half profit beat its own forecast.

The MSCI index has lost 14 percent this year, part of a global slump in equities that erased almost $13 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.

Global Concerns Easing

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 a 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 12 percent to A$52.05, the most since March 19.

Banks Lead Advance

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.

Other financial companies advanced on speculation credit- market losses will ease as the risk of holding corporate bonds fell in Asia. A gauge of financial stocks led gains among the MSCI Asia Pacific Index's 10 groups, contributing to 54 percent of the broader measure's advance.

Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, gained 3 percent to 1,016 yen. Mizuho Financial Group Inc., Japan's No. 2 bank by assets, climbed 4.8 percent to 586,000 yen. National Australia Bank Ltd., the nation's largest bank, rose 5.1 percent to A$29.07.

Crude Oil, Yen

``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.''

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, according to prices from Morgan Stanley.

Honda climbed 3.6 percent to 3,730 yen, while Daihatsu Motor Co. rose 3.8 percent to 1,296 yen on speculation a decline in fuel costs will boost spending on automobiles.

Crude oil in New York was recently at $127.62 a barrel in after-hours trading, poised for the lowest close since June 4. Oil dropped $3.09 a barrel to $127.95 a barrel yesterday.

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

Airlines Climb

Japanese automakers also advanced on speculation a weaker yen will boost the value of their overseas sales when converted into local currency. 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.

The 17-member Bloomberg Asia Pacific Airlines Index gained 3.5 percent today, the biggest increase since March 25, on the expectation jet-fuel costs will drop.

Korean Air Lines, South Korea's largest airline, gained 5.2 percent, the most since July 10, to 47,800 won. Air New Zealand Ltd. rose 4.4 percent to NZ$1.20 in Wellington. Qantas Airways Ltd., Australia's biggest carrier, climbed 6.5 percent to A$3.61 in Sydney, the biggest increase since July 1.

The region's biggest oil companies declined. Inpex Holdings Inc., Japan's largest explorer, dropped 3.7 percent to 1.112 million yen. Woodside Petroleum Ltd., Australia's No. 2 oil and gas producer, slid 1.6 percent to A$56.18.

Komatsu climbed 3.1 percent to 2,975 yen, the highest since June 27. Hitachi Construction Machinery Co. rose 4.5 percent to 3,250 yen. Caterpillar, the world's largest maker of earthmoving equipment, raised its 2008 sales forecast after second-quarter profit climbed to a record on Chinese and Middle Eastern demand.

Asahi Breweries gained 3.8 percent to 1,964 yen. First-half net income of 18.9 billion yen ($176 million) beat the company's 11.5 billion yen forecast, according to a preliminary earnings statement yesterday. The company cited cuts in advertising and fixed costs for the result.

State Bank of India, the nation's largest lender, gained 5.7 percent to 1,483 rupees. Prime Minister Manmohan Singh won the country's first confidence motion in a decade, giving him the support needed to introduce stalled reforms.

To contact the reporters for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Chen Shiyin in Singapore at schen37@bloomberg.net