By Chua Kong Ho and Shani Raja
Aug. 11 (Bloomberg) -- Asian stocks gained, led by banks and automakers, as the five-week slump in commodity prices eased inflation concerns and boosted earnings prospects.
Commonwealth Bank of Australia advanced after the country's central bank said ``there's scope'' to cut interest rates. Sumitomo Rubber Industries Inc. rose the most in more than four years after Japan's third-largest tiremaker said it will meet profit forecasts and as crude traded near a two-month low. Honda Motor Co., Japan's second-largest automaker, and Sony Corp. rose in Tokyo after the dollar traded close to a seven-month high against the yen, boosting the value of overseas sales.
``The correction in oil prices and commodities generally is pro-growth,'' said Prasad Patkar, who helps oversee $1.8 billion at Platypus Asset Management in Sydney. ``As the inflation scenario becomes a bit more tame, corporates are getting some relief from the squeeze they've been experiencing.''
The MSCI Asia-Pacific Index added 1.4 percent to 128.82 as of 2:38 p.m. in Tokyo. About three stocks advanced for each that declined, with eight of the index's 10 industry groups gaining. The gauge dropped 2.7 percent last week as commodity producers fell after prices of copper and oil declined.
Japan's Nikkei 225 Stock Average climbed 2.1 percent to 13,438.57. Hoya Corp., the nation's largest maker of optical glass, surged the most in almost seven years after operating profit fell less than estimated.
Most benchmark indexes advanced throughout the region. China's CSI 300 Index slumped 3.7 percent, overtaking Vietnam as the world's worst-performer this year, as producer prices climbed at the fastest pace since 1996.
Commodity Prices
Slowing global growth has undermined gains in commodities prices, which rose to records this year. The Reuters/Jefferies CRB Index of 19 raw materials, including copper and oil, has tumbled 18 percent from its July 2 peak. MSCI's Asian index fell 19 percent this year as higher commodity prices drove up costs for companies and curbed consumer spending.
Rio Tinto Ltd., the world's second-largest mining company, dropped in Sydney. The shares have tumbled 28 percent from their May 19 record.
U.S. stocks rose on Aug. 8, driving the Standard & Poor's 500 Index to the largest weekly gain since April. Home Depot Inc. led retailers higher on the decline in oil. S&P 500 futures fell 0.9 percent.
Commonwealth Bank, Australia's biggest mortgage lender, gained 3.2 percent to A$44.80. Australia & New Zealand Banking Group Ltd., the nation's fourth-largest bank, added 2.7 percent to A$17.81. The Reserve Bank of Australia said it will have more room to cut interest rates as weakening domestic demand eases inflation.
Monetary Policy
``With a global slowdown, you'll have an aggregate slowdown in demand,'' said Lee King Fuei, a Hong Kong-based portfolio manager at Schroder Investment Management, which oversees about $260 billion in assets globally. ``A slowdown in inflation means the potential for monetary loosening has widened.''
Financial shares rose even after Babcock & Brown Ltd. tumbled 9.4 percent to A$6.16. Australia's second-biggest manager of listed funds said profit for the first six months this year will drop between 25 percent and 40 percent from A$250 million a year earlier, as the value of property and funds management investments slump.
Sumitomo Rubber rose 6.9 percent to 926 yen, the most since Jan. 25. Bridgestone Corp., the world's largest tiremaker, rose 3.7 percent to 1,887 yen, headed for the highest close since June 18. Yokohama Rubber Co. gained 3.5 percent to 567 yen.
About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association. Last week, Bridgestone slashed its annual net-income target by 27 percent owing to rising material costs and weaker U.S. sales.
Oil Prices
Crude oil for September delivery dropped 4 percent to $115.20 a barrel in New York at the end of last week, the lowest since May 2, after a plunge in the euro reduced the investment appeal of commodities. Oil rose $116.28 a barrel today on concern conflict between Russia and Georgia may disrupt Caspian Sea supplies.
Honda Motor advanced 5.2 percent to 3,650 yen. Toyota Motor Corp., Japan's biggest automaker, gained 4.1 percent to 5,030 yen. Sony, the world's second-largest manufacturer of consumer electronics, climbed 3.1 percent to 4,390 yen.
The yen fell as low as 110.39 today against the U.S. currency at the close of stock trading in Tokyo on Aug. 8, the weakest since Jan. 2. A stronger dollar boosts the value of repatriated sales.
Metals Slump
Newcrest Mining Ltd., Australia's largest gold mining company, tumbled 7.5 percent to A$24.43, the lowest since September 2007. Gold fell for the sixth straight session, the longest slide since June 2006.
A measure of six metals traded on the London Metal Exchange dropped 3.6 percent on Aug. 8. Zinc lost 3.4 percent, copper 3.5 percent and nickel 3.7 percent.
Hon Hai Precision Industry Co., the world's largest contract electronics manufacturer, led gains among technology shares after posting its highest monthly sales this year. The stock surged 6.1 percent to NT$173 in Taipei, the highest since June 11.
China Eastern Airlines Corp., the country's third-largest carrier, dropped 6.5 percent to HK$2, after saying that an agreement to sell a stake to Singapore Airlines Ltd. had expired.
-- With reporting by Chen Shiyin in Singapore. Editors: Richard Frost, Darren Boey
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
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