Asian Stocks Rise as Greece Concern Eases; Rio, Nissan Advance

By Shani Raja and Toshiro Hasegawa

Feb. 10 (Bloomberg) -- Asian stocks rose for a second day after European officials said they may help Greece grapple with its budget deficit, easing concern a sovereign default will cripple a global economic recovery.

Rio Tinto Group gained 1.4 percent, leading gains among mining companies, after rival BHP Billiton Ltd.’s profit beat analyst estimates. Japan Tobacco Inc. jumped after raising its profit forecast by 13 percent. Nissan Motor Co. climbed 1.6 percent after predicting a return to profit. Komatsu Ltd. rose 3.2 percent in Tokyo after a government report showed Japan’s machinery orders climbed. Stocks pared gains as Chinese export and trade surplus reports missed economist estimates.

“Markets are hopeful that there’ll be some sort of positive resolution of the Greece situation,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “Earnings across the region reinforce the view that the recovery is gaining momentum and that the attention on reducing costs is bearing some fruit.”

The MSCI Asia Pacific Index added 0.2 percent to 114.95 as of 3:27 p.m. in Tokyo, with five stocks rising for each three that dropped. The gauge has lost 9.3 percent from a 17-month high on Jan. 15 on speculation central banks will tighten monetary policy, and that Greece, Spain and Portugal will struggle to curb deficits.

The Nikkei 225 Stock Average advanced 0.3 percent in Tokyo. China’s Shanghai Composite Index gained 0.8 percent, as the customs bureau said January exports rose 21 percent from a year earlier and imports climbed 85.5 percent. Taiwan’s Taiex Index added 1.1 percent.

Deficit Concerns

Geely Automobile Holdings Ltd. surged 6.2 percent after saying January sales climbed to a record. Cosco Pacific Ltd. added 1.9 percent in Hong Kong after BNP Paribas recommended investors buy the stock. Karoon Gas Australia Ltd. jumped 12 percent in Sydney after a shareholder increased its stake.

Futures on the U.S. Standard & Poor’s 500 Index lost 0.2 percent. The gauge climbed 1.3 percent yesterday on growing prospects for a bailout of Greece.

Olli Rehn, who is taking over as European Union economic affairs commissioner, said in an interview that support for Greece will be discussed within days. Michael Meister, a German legislator from Chancellor Angela Merkel’s Christian Democrats, said lawmakers in that country are considering financial assistance.

“Whether Greece will fail to repay its debt is the crux of this issue,” said Masaru Hamasaki, chief strategist at Tokyo- based Toyota Asset Management Co., which oversees the equivalent of $14 billion.

Best Performers

Material producers were the biggest contributor to the MSCI Asia Pacific Index’s gain today after oil and copper futures in New York jumped at least 2.5 percent. Materials companies are the second-best performing of the MSCI Asia Pacific’s 10 industry groups in the past year.

BHP, the world’s biggest mining company, climbed as much as 3.5 percent before closing 0.1 percent higher at A$39.88. BHP today said net income more than doubled in the six months ended Dec. 31, as a one-time charge for mine closures deflated earnings a year earlier.

“In the long term we continue to expect strong growth in demand for our commodities,” the company said in a statement.

In Tokyo, Mitsubishi Corp., whose BHP Billiton Mitsubishi Alliance is the world’s largest steelmaking coal exporter, climbed 0.9 percent to 2,155 yen. Rio Tinto, the world’s third- largest mining company, gained 1.4 percent to A$67.94. OZ Minerals Ltd. jumped 3.1 percent to A$1.015.

Net Income

Nissan rose 1.6 percent to 743 yen. Nissan, which is Japan’s No. 3 carmaker, scrapped its loss projection yesterday to forecast net income for the year to March 31. The company benefitted from tax cuts and government subsidies in China and Japan.

Japan Tobacco, the world’s third-largest publicly traded cigarette maker, rose 5.6 percent to 328,000 yen after raising its profit forecast 13 percent on higher overseas demand. Japan Tobacco is boosting international sales as a declining smoking rate and higher taxes in its home market stifle demand.

Japan’s industrial manufacturers advanced after the Cabinet Office reported a 20.1 percent month-on-month surge in the nation’s machinery orders in December, more than twice as much as economists had estimated. Orders are perceived as an indicator of business investment in the next three to six months.

Komatsu, the world’s second-biggest maker of earthmoving equipment, jumped 3.2 percent to 1,784 yen. Fanuc Ltd., Japan’s largest maker of industrial robots, advanced 0.7 percent to 8,850 yen.

Robust Demand

“With robust foreign demand, companies, especially manufacturers, will likely beat their own earnings forecasts,” said Toyota Asset’s Hamasaki.

In Taipei, Acer Inc., the world’s No. 2 computer vendor, gained 1.6 percent to NT$87.40 after saying fourth-quarter net income climbed 25 percent to its biggest quarterly profit in almost three years. HTC Corp. gained 3.5 percent to NT$307.5 after the company said the board approved plans to buy back as many as 15 million shares. Compal Communications Inc., which makes mobile phones, jumped 6.9 percent to NT$34.30 after it said January sales gained 34 percent from a year earlier.

The MSCI Asia Pacific Index completed its third weekly decline last week as an unexpected increase in U.S. jobless claims and concerns over debt in Europe dented investor confidence. That cut the average price of stocks in the gauge to 18 times estimated earnings, the lowest level since February 2009, according to data compiled by Bloomberg.

Fragile Situation

The cost of protecting Australian corporate and sovereign bonds from default dropped as speculation that Greece may receive European Union aid saw markets rally worldwide. The Markit iTraxx Australia Index dropped 7 basis points to 103.5 basis points, the biggest decline since Nov. 30, according to Deutsche Bank AG and CMA DataVision.

“The recovery continues, but it’s not all plain sailing,” said Colonial’s Halmarick. “The situation in Europe reminds us that the situation is fairly fragile and that we’ve still got a long way to go.”

Geely Automobile jumped 6.5 percent to HK$3.29. January sales increased 137 percent from a year earlier to 43,877 vehicles, the manufacturer said in a statement to the Hong Kong stock exchange yesterday.

Separately, the China Association of Automobile Manufacturers said total vehicle sales more than doubled to a record 1.66 million units from a year earlier. SAIC Motor Corp., China’s largest carmaker, climbed 2.6 percent to 20.51 yuan in Shanghai.

Broker Recommendations

Karoon Gas Australia Ltd. jumped 12 percent to A$6.39 after shareholder Wellington Management boosted its stake to 11.9 percent from 10.7 percent, an exchange filing showed. Cosco Pacific added 4 percent to HK$11. BNP Paribas raised the company’s stock rating to “buy” from “hold,” citing an improving outlook and attractive valuation.

LG Telecom Ltd. slumped 4.5 percent to 7,820 won in Seoul, leading declines among phone stocks after being downgraded to “market perform” from “buy” at Hyundai Securities, and to “hold” from “buy” at Eugene Investment & Securities.

In Tokyo, Comsys Holdings Corp., which provides telecommunications engineering services, dropped 8.5 percent to 833 yen after Nomura Holdings Inc. cut its rating to “neutral” from “buy.”

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.