Asian Stocks Extend Global Rally on U.S. Treasury’s Bank Plan

By Hanny Wan and Masaki Kondo

March 24 (Bloomberg) -- Asian stocks rose, led by finance and energy stocks, after a U.S. Treasury plan to remove toxic assets from banks triggered a global rally in equities.

Commonwealth Bank of Australia climbed 3.5 percent in Sydney after the Treasury said it will finance as much as $1 trillion in purchases of banks’ distressed assets. BHP Billiton Ltd., Australia’s largest oil producer, added 2.2 percent after oil prices rose. Toyota Motor Corp., which gets 37 percent of sales from North America, rose 3.6 percent in Tokyo after the yen weakened against the dollar.

“Investors are riding a tide of euphoria over the U.S. plan,” Mamoru Shimode, chief equity strategist at Resona Trust & Banking Co. said in an interview with Bloomberg Television. “Whether $1 trillion will suffice or there will be willing sellers remains to be seen.”

The MSCI Asia Pacific Index advanced 1.8 percent to 83.68 at 9:47 a.m. in Tokyo, adding to a 3.4 percent gain yesterday. The gauge has rallied 19 percent from a five-year low on March 9 amid speculation the worst of the financial crisis is over.

Japan’s Nikkei 225 Stock Average climbed 2.5 percent to 8,421.08. Australia’s S&P/ASX 200 Index gained 1.5 percent, while South Korea’s Kospi Index rose 1.4 percent. All markets open for trading advanced.

Futures on the U.S. Standard & Poor’s 500 Index lost 0.2 percent today. The gauge soared 7.1 percent in New York, the biggest advance since Oct. 28 and narrowing this year’s loss to 8.9 percent. Europe’s Dow Jones Stoxx 600 Index gained 3 percent to the highest close since Feb. 19.

Purchasing Power

The Treasury, Federal Reserve and Federal Deposit Insurance Corp. will provide private investors with financing to buy illiquid loans and securities held by banks, the Treasury said yesterday. The Public-Private Investment Program will use up to $100 billion from the $700 billion Troubled Asset Relief Program enacted last year, giving the government “purchasing power” of $500 billion, which may double over time, the Treasury said.

Commonwealth Bank, Australia’s largest mortgage lender, jumped 3.5 percent to A$36.30. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, surged 5.3 percent to 539 yen.

An index of finance stocks on the MSCI Asia Pacific Index climbed 2.5 percent. The gauge is the worst performer in the past 12 months, as credit-related losses worldwide swelled to more than $1.2 trillion.

BHP added 2.2 percent to A$34.05. Woodside Petroleum Ltd., Australia’s second-largest oil producer, climbed 4.1 percent to A$40.05. In New York, crude-oil futures jumped 3.3 percent to $53.80 a barrel yesterday, the highest settlement since Nov. 28.

Yen Declines

Toyota gained 3.6 percent to 3,160 yen after the currency depreciated against the dollar to as much as 97.35 from 96.18 at the 3 p.m. close of stock trading in Tokyo yesterday. A weaker local currency boosts the value of overseas sales for Japanese companies.

The Bank of Japan will brief executives of 14 major banks today on its plans to provide subordinated loans to help them bolster capital, Nikkei English News reported, without saying where it obtained the information. The central bank will urge banks to use the funds to increase lending, public broadcaster NHK said in a separate report today.

To contact the reporters on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.