Asian Stocks Advance on Federal Reserve Loan to AIG; Banks Rise

By Chua Kong Ho and Kotaro Tsunetomi

Sept. 17 (Bloomberg) -- Asian stocksrose, helping the regional benchmark index rebound from the steepest plunge in eight months, after the Federal Reserve invoked emergency powers to save American International Group Inc. from collapse.

Mitsubishi UFJ Financial Group Inc. added 2.8 percent andCommonwealth Bank of Australia Ltd. gained 1.2 percent as concern eased the failure of AIG, the No. 1 U.S. insurer, would cause more financial losses globally. The Federal Reserve agreed to lend as much as $85 billion to AIG, the largest U.S. insurer. Woodside Petroleum Ltd. rose 1.8 percent as oil rebounded.

``Expectations of an AIG rescue will likely spur people to buy back into the market,'' said Masayoshi Yano, a senior market analyst at Tokyo-based Meiwa Securities Co. ``Investors are keeping a sharp eye on all AIG developments.''

The MSCI Asia Pacific Index rose 0.98, or 0.9 percent, to 111.41 at 10:06 a.m. in Tokyo. The measure plunged the most in eight months yesterday as credit turmoil pushed Lehman Brothers Holdings Inc. to bankruptcy, and caused a debt-rating downgrade of AIG. The regional gauge is down 29 percent this year.

Japan's Nikkei 225 Stock Average climbed 1.3 percent to 11,757.64, while South Korea's Kospi Index added 3.1 percent. All Asia-Pacific markets open for trading advanced.

U.S. stocks climbed, driving the Standard & Poor's 500 Index 1.8 percent higher, as speculation AIG would weather a funding shortage boosted financial shares in the last hour of trading. S&P futures gained 0.5 percent today.

Crude oil jumped 3 percent to $93.90 a barrel, rebounding from a decline of more than $10 a barrel in the past two days.

To contact the reporter for this story: Chua Kong Ho in Shanghai atkchua6@bloomberg.net; Kotaro Tsunetomi in Tokyo atktsunetomi@bloomberg.net.