Asia Stocks Rise for Fourth Day, Won Climbs

By Shiyin Chen - Oct 11, 2011 2:17 PM GMT+0700

European stocks and copper fell for the first time in five days before a vote in Slovakia on the euro-area bailout fund and U.S. companies start reporting third- quarter earnings. Treasuries declined, while Asian stocks gained after a Chinese state investment fund bought shares in banks.

The Stoxx Europe 600 Index slid 0.6 percent as of 4:10 p.m. in Tokyo. Standard & Poor’s 500 Index futures dipped 0.5 percent, after the U.S. stocks gauge jumped yesterday by the most since August. Treasury 10-year yields increased six basis points to 2.14 percent. The MSCI Asia Pacific Index rallied 1.7 percent. The euro was little changed at $1.3631 after appreciating yesterday by the most since July 2010. Copper lost 2.1 percent.

Slovakia is the only country in the 17-nation euro area that hasn’t ratified the region’s retooled bailout fund. China joined Europe in signaling support for lenders after financial stocks tumbled during the global market turmoil. U.S. bank earnings probably dropped in the third quarter as investment- banking businesses declined. Alcoa Inc. (AA) will be the first Dow Jones Industrial Average company to report results later today.

“There’s certainly tension but it seems as though we’re moving toward a sustainable solution for Greece,” Philip Poole, head of investment strategy at HSBC Global Asset Management, said in a Bloomberg Television interview from Hong Kong. “There’s been a lot of speculation about the banks. The Chinese move is important in trying to re-establish confidence.”

Crisis Summit

About five shares retreated for every two that gained n the Stoxx 600, which snapped a four-day, 8.5 percent rally that was the most since November 2008. Stocks jumped yesterday after leaders of France and Germany pledged to deliver a plan to stem the debt by Nov. 3. European leaders pushed back a debt-crisis summit to Oct. 23 from Oct. 18 amid opposition to German Chancellor Angela Merkel’s drive for deeper-than-planned writedowns of Greek bonds.

“Investors’ risk appetite is improving on optimism Europe’s debt crisis will ease, supporting regional currencies,” said Tohru Nishihama, a Tokyo-based economist at Dai-ichi Life Research Institute Inc. “Yet this is a short-term sentiment as Europe’s problem is not fundamentally solved.”

The S&P 500 rallied 3.4 percent yesterday, the biggest gain since Aug. 23, as financial and commodity shares jumped. Alcoa, the biggest U.S. aluminum producer, may say today after U.S. markets close that profit was 23 cents a share, compared with 9 cents a year earlier, according to the average estimate in a Bloomberg News survey of 15 analysts.

U.S. Earnings

Earnings per share for the S&P 500, excluding financial companies, are forecast to have increased 14 percent in the third quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show.

Treasuries fell, pushing yields to a five-week high, after data last week showed payrolls climbed and manufacturing accelerated in September. Commerce Department figures due on Oct. 14 may show U.S. retail sales increased in September at the fastest pace in six months, helping to ease concern the recovery is faltering.

The Federal Reserve will release the minutes of its latest interest-rate setting meeting tomorrow. Chairman Ben S. Bernanke said last week in testimony to Congress that the central bank can take further steps to sustain a recovery that’s “close to faltering” after almost three-years of near-zero interest rates and $2.35 trillion of bond purchases.

The euro was little changed at 104.62 yen. The won climbed 0.6 percent to 1,164.50 per dollar, the strongest level since Sept. 21. The ringgit strengthened for a sixth day. Malaysia’s industrial production climbed 3 percent in August from a year earlier, after a 0.6 percent drop the previous month, a Statistics Department report showed today.

China Banks

China’s yuan appreciated 0.1 percent to 6.3451 per dollar, adding to yesterday’s 0.6 percent gain, the most since its revaluation in July 2005.

About five shares rose for every one that fell on MSCI’s Asia Pacific Index, helping the gauge extend a three-day, 5.9 percent rally. The index is poised for its biggest four-day jump since March 2009. The Nikkei 225 (NKY) Stock Average advanced 2 percent in Japan, where financial markets were closed for a holiday yesterday. Taiwan’s Taiex jumped 2.6 percent. The island’s financial markets were also closed yesterday.

Hong Kong’s Hang Seng Index surged 2.2 percent. Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender by market value, and China Construction Bank Corp. (939) jumped at least 5.8 percent each in Hong Kong, after Central Huijin started buying shares in ICBC, China Construction, Agricultural Bank of China Ltd. and Bank of China Ltd. in the open market yesterday.

Coal, Credit Risk

The Shanghai Composite Index erased gains of as much as 2.9 percent, after the Chinese government announced higher resource taxes on coking coal. Yanzhou Coal Mining Co. tumbled 4.9 percent in Shanghai, leading losses among coal producers.

The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment fell, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropping 14 basis points to 211.5 basis points, Royal Bank of Scotland Group Plc prices show. That will be the fifth consecutive day of declines and the lowest level since Sept. 21, according to data provider CMA.

Rubber futures in Tokyo gained as much as 3.3 percent to 323.9 yen per kilogram, the highest level since Sept. 28, as crude oil gained, increasing the appeal of the commodity used to make tires. Flooding across Thailand, the largest producer and exporter, also lifted prices on concern tapping would be disrupted, leading to lower latex output.

Copper for three-month delivery lost 2.1 percent to $7,340 a metric ton on the London Metal Exchange, halting a four-day, 10 percent rally. Nickel slipped 0.6 percent, while aluminum fell 0.7 percent.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net