Asian Stocks Advance, Led by Commodity Producers, Honda Motor

By Patrick Rial and Ian Sayson

Oct. 21 (Bloomberg) -- Asian stocks climbed, led by producers of raw materials and consumer goods, as optimism grew governments will expand efforts to boost economic growth.

Rio Tinto Ltd. gained 12 percent and Honda Motor Co., which gets more than half its sales in North America, advanced 6.8 percent after Federal Reserve Chairman Ben S. Bernanke said he'd back a stimulus package. Hyundai Development Co. added 4.8 percent after a newspaper said South Korea will aid builders. Woodside Petroleum Ltd. jumped 11 percent after OPEC signaled it may cut oil output. Indonesia's PT Bank Ekonomi Raharja surged 10 percent after HSBC Holdings Plc bought a controlling stake.

``Confidence is coming back into the markets,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``There's more risk appetite now and investors are buying back extremely depressed assets.''

The MSCI Asia Pacific Index climbed 2.1 percent to 92.51 as of 4:11 p.m. in Tokyo, rising for a third day, its longest winning streak since July 24. The gauge is down 41 percent this year and set for its worst annual performance since the index was created in 1987, as credit market turmoil toppled financial institutions and slowed global economic growth.

The slump has brought valuations on the index to 10.4 times reported earnings, near a record low reached earlier this month. That's compared with 19.5 times for the U.S. Standard & Poor's 500 Index.

Japan's Nikkei 225 Stock Average added 3.3 percent to 9,306.25, extending its advance from a five-year low on Oct. 10 to 12 percent. Australia's S&P/ASX 200 Index jumped 3.9 percent, the region's biggest increase, led by Woodside and Rio.

Money Markets

Money-market rates fell. Hong Kong's interbank dollar loan rate, known as Hibor, dropped 31 basis points, a third day of declines and the longest streak in a month.

Hong Kong's Hang Seng Index fell, led by Citic Pacific Ltd., a unit of China's biggest investment company, which plunged 48 percent after saying it may lose $2 billion on currency bets. China Mobile Ltd. slumped after reporting profit that missed analyst estimates. South Korea's Hyundai Motor Co. dropped after cutting production on slowing demand.

Futures on the S&P 500 fell 0.6 percent. The index jumped 4.8 percent yesterday, paring its annual decline to 33 percent, after Halliburton Co.'s profit topped estimates and Exelon Corp. offered $6.2 billion for NRG Energy Inc.

A measure of energy stocks on MSCI's Asian index surged 3.6 percent, the most among 10 industries. The shares trade at 9.1 times reported earnings, near a seven-year low.

Crude Gains

Australia's two biggest oil producers led the gains as crude rose for a third day. BHP Billiton Ltd. jumped 11 percent to A$29.31, while Woodside climbed 11 percent to A$42.52.

Crude oil gained as much as 1.9 percent to $75.69 on signs the Organization of Petroleum Exporting Countries may cut output to halt a 50 percent drop in prices since July. Gold and platinum prices advanced in New York, while copper fell.

Mitsui & Co., Japan's second-largest trading company and which generates more than half its profits from commodities dealing, surged 7.5 percent to 1,074 yen after JPMorgan Chase & Co. raised the shares to ``buy.'' Rio Tinto Group, which is fending off a $70 billion hostile bid from BHP Billiton Ltd., increased 12 percent to A$74.36.

Stocks also gained after the Fed's Bernanke said lawmakers should consider new measures to improve access to credit for consumers, homebuyers and businesses, and Japan's government was reported to be finalizing an economic stimulus package that includes tax cuts.

Honda added 6.8 percent to 2,435 yen. Canon Inc., the world's largest seller of digital cameras, jumped 5.5 percent to 3,460 yen.

`Taking Notice'

Japan's ruling parties have agreed to a 2 trillion yen ($19.6 billion) tax cut for individuals that would save a typical household of four about 65,000 yen per year, according to reports in the Mainichi and Nikkei newspapers.

``Investors are taking notice of the determination by governments to bolster economies,'' said Masaru Hamasaki, a senior strategist at Toyota Asset Management Co., which manages the equivalent of $3.3 billion.

South Korean construction companies advanced after the Korea Economic Daily reported the government will announce a 12 trillion won ($9.1 billion) aid package to the country's builders to help ease a cash squeeze.

Hyundai Development, a home builder, gained 4.8 percent to 30,500. Sungwon Corp., a builder, surged 11 percent to 4,480 won.

Bank Ekonomi, an Indonesian lender to traders and restaurants, surged by its 10 percent trading limit to 2,090 rupiah. HSBC agreed to pay $607.5 million for an 88.9 percent stake in the bank.

Fubon, Citic

Fubon Financial Holding Co., Taiwan's second-largest financial services company, jumped 6.8 percent to NT$20.35 after the Commercial Times said it plans to acquire Jih Sun Financial Holdings Co. Fubon yesterday agreed to buy the local life insurance unit of ING Groep NV for $600 million. Jih Sun also advanced 6.8 percent to NT$2.66.

Corporate bond risk decreased. Markit iTraxx indexes for Japan and Australia that measure the cost of protecting bonds from default declined 5 basis points, spurring confidence the global credit squeeze is abating.

In Hong Kong, Citic Pacific sank 48 percent to HK$7.62, set for its biggest drop since the shares began trading in 1990. The company ousted two executives and said it would secure a $1.5 billion loan from its parent, after incurring as much as $2 billion in losses following unauthorized bets on the Australian dollar. Citic Pacific bought currency contracts to fund an iron- ore mine in Australia.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.