Asian Stocks Snap Six-Day Loss on Bank Rescue Bill Speculation

By Patrick Rial and Shani Raja

Oct. 1 (Bloomberg) -- Asian stocks climbed, snapping a six- day losing streak, on speculation the U.S. Senate will approve a $700 billion bank-rescue plan to revive credit markets and support the global economy.

Westpac Banking Corp., Australia's third-largest bank, rallied 8.2 percent as lawmakers reconsidered opposition to the package that prompted the largest drop in U.S. shares for 21 years. Rio Tinto Group surged 12 percent after Australian regulators said they won't oppose BHP Billiton Ltd.'s takeover. Daikin Industries Ltd. dropped as Japan's manufacturers turned pessimistic on the economy for the first time in five years.

``The very expectation U.S. politicians might do something is proving positive for markets,'' said Troy Angus, who helps manage $3.1 billion at Paradice Investment Management in Sydney. ``The financial crisis might abate, but we still have the impact on the real economy to work its way through worldwide.''

The MSCI Asia Pacific Index climbed 1.7 percent to 108.83 as of 3:44 p.m. in Tokyo, with financial shares accounting for 38 percent of the advance. The gauge lost 8.6 percent in the previous six days as the failures of Washington Mutual Inc. and Bradford & Bingley Plc, record-high bank borrowing costs, and the rejection of the rescue plan rattled investor confidence.

Japan's Nikkei 225 Stock Average gained 1 percent to 11,368.26. Most markets in Asia rose. China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays.

Samsung Electronics Co. led a 0.6 percent drop in South Korea's Kospi index after Macquarie Group Ltd. said semiconductor profit margins will decline. Mitsui O.S.K. Lines Ltd. led shipping stocks lower as the Baltic Dry Index, a measure of costs to transport commodities, completed its worst month on record.

Bailout `Catalyst'

U.S. stocks jumped the most in six years yesterday on renewed confidence a bailout will be passed this week. The Standard & Poor's 500 Index surged 5.3 percent, a day after posting an 8.8 percent decline. Futures on the S&P 500 declined 0.7 percent today.

The Sept. 29 slump wiped off $1.2 trillion in market value from American equities and sent lawmakers scrambling to revive the rescue plan in order to prevent a meltdown in financial markets. Senate Democrats and Republicans agreed to vote on the bailout later today.

``The erosion of a trillion dollars of shareholder wealth may be the catalyst required to get voters to pressure their leaders to approve a financial rescue package,'' Patrick Mohr, an equity strategist at Nikko Citigroup Ltd. in Tokyo, wrote in a report. ``If the `pass the bill' chorus from voters becomes loud enough there should be no problem with passage.''

Westpac, Commonwealth

The deepening credit crisis helped drag the MSCI Asia Pacific down by 15 percent last month, the most since 1990 when Japan's asset bubble burst.

Westpac gained 8.2 percent to A$23.25. Nomura Holdings Inc., Japan's largest brokerage, jumped 6 percent to 1,405 yen. Commonwealth Bank of Australia, the nation's biggest lender, added 5.3 percent to A$44.86.

Rio Tinto, the world's third-largest mining company, surged 12 percent to A$95. BHP's hostile $101 billion bid for Rio isn't likely to ``substantially lessen competition,'' the Australian Competition and Consumer Commission said. BHP, Rio's largest rival, gained 5.7 percent to A$32.75.

Higher oil prices also helped boost BHP, Australia's No. 1 producer. Crude oil for November delivery rose 4.4 percent to $100.64 a barrel in New York, rebounding from its biggest drop in seven years. The contract recently traded at $101.97.

Mitsubishi Corp., Japan's largest trading company, and which generates more than half of its profit from commodities dealing, climbed 3.9 percent to 2,240 yen.

Baltic Dry

Daikin, the biggest Japanese maker of air conditioners, dropped 3.2 percent to 3,360 yen. Sumitomo Electric Industries Ltd., Japan's largest maker of wires and cables, slumped 2.6 percent to 1,104 yen.

The Bank of Japan's Tankan index of confidence among large manufacturers, the nation's most closely watched economic release, dropped below 0 for the first time since 2003, indicating pessimists outnumber optimists. Companies surveyed indicated they are scaling back capital spending plans as the global economy moves toward recession.

Samsung Electronics dropped 1.1 percent to 533,000 won. Semiconductor profit margins for Asia's biggest maker of computer chips will turn negative in the fourth quarter, according to Macquarie.

Mitsui O.S.K., Japan's second-biggest bulk shipper, slid 4.1 percent to 848 yen. Kawasaki Kisen Kaisha Ltd., the third largest, dropped 4.4 percent to 604 yen. Hyundai Heavy Industries Co., the world's biggest shipbuilder, slumped 3 percent to 261,000 won.

The Baltic Dry Index lost 8.2 percent yesterday, bringing its slide for September to a record 53 percent.

Sumitomo Chemical Co. slumped 6.8 percent to 424, the lowest close since February 2004. The Japanese producer of petrochemicals and pharmaceuticals slashed its full-year net income forecast yesterday by 73 percent due to higher costs.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.