Asian Stocks Rise, Set for Best Week in 11 Months, as Oil Falls

By Chua Kong Ho and Shani Raja

July 24 (Bloomberg) -- Asian stocks advanced, set for the best week in 11 months, as a stronger dollar and declining commodity prices bolstered automakers and consumer-electronics manufacturers.

Sony Corp. rose in Tokyo as the U.S. currency traded near a one-month high, boosting the value of dollar-denominated earnings. Honda Motor Co. gained after European carmakers reported results that beat analyst estimates. Cathay Pacific Airways Ltd. surged as oil traded near the lowest in seven weeks. Bridgestone Corp., the world's largest tiremaker by sales, climbed for a sixth day after the price of rubber fell.

``The stronger dollar shows confidence that the outlook for the U.S. economy is improving, and should make some Asian exports more competitive,'' said Simon Bonouvrie, who helps manage about $1.6 billion as a portfolio manager at Platypus Asset Management in Sydney. ``Lower oil prices should also be good for global growth and creates a positive expectation for company margins.''

The MSCI Asia Pacific Index gained 0.9 percent to 136.07 as of 12:30 p.m. in Tokyo, set for its highest close since June 30. The measure has jumped 5.3 percent this week, heading for its biggest weekly advance since Aug. 24. About three stocks rose for each that declined, with eight of the index's 10 groups advancing.

Japan's Nikkei 225 Stock Average climbed 1.3 percent to 13,481.71. Most benchmark indexes in Asia advanced apart from Malaysia, Singapore and Thailand.

U.S. stocks rose for a second day, with the Standard & Poor's 500 Index gaining 0.4 percent, as oil retreated and earnings reports from AT&T Inc. and Pfizer Inc. eased concern that the profit slump will worsen. S&P 500 futures declined 0.1 percent today.

Weekly Advance

MSCI's Asian index has rallied this week, after closing at its lowest level since October 2006 last week, as financial stocks surged after Citigroup Inc. and JPMorgan Chase & Co. reported results that topped analyst estimates and oil tumbled 16 percent from a record $147.27 a barrel on July 11.

Honda Motor Co., which gets about 70 percent of its operating profit from North America, added 2.7 percent to 3,800 yen. Toyota added 3.7 percent to 5,050 yen, after saying yesterday preliminary second-quarter sales rose about 2 percent on higher demand in China and other emerging markets.

European automakers Volkswagen AG, PSA Peugeot Citroen and Fiat SpA reported earnings yesterday that beat analysts' estimates and forecast higher revenue as record fuel costs spurred sales of compact cars.

The dollar climbed to 107.98 against the yen earlier, the highest since June 26. It was recently little changed. Every 1 yen gain against the dollar reduces Honda's annual operating profit by 20 billion yen and Toyota's by 40 billion yen, according to the automakers.

Dollar Effect

Sony Corp., the maker of the Playstation 3 game machine, gained 2.3 percent to 4,480 yen. Canon Inc., the world's biggest maker of digital cameras, advanced 1.9 percent to 5,270 yen.

Cathay Pacific, Hong Kong's biggest airline, jumped 4 percent to HK$16.26, extending yesterday's 6.3 percent surge. China Southern Airlines Co., the nation's largest carrier, added 6.7 percent to HK$3.66.

Oil fell 3.1 percent to $124.44 a barrel yesterday, dropping below $125 for the first time in six weeks, after a U.S. government report showed that fuel stockpiles increased. Crude prices are little changed today.

Bridgestone gained 3.3 percent to 1,844 yen, the highest since June 20. Yokohama Rubber Co., Japan's second-largest tiremaker, added 2.7 percent to 530 yen.

Natural rubber futures in Tokyo dropped for a second day to the lowest in seven weeks as falling oil cut the appeal of commodities as an inflation hedge.

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