Asia Stocks Rise on Europe Optimism

By Shani Raja - Oct 17, 2011 7:47 AM GMT+0700

Asian stocks rose, extending the biggest weekly gain since March on the region’s benchmark index, after Group of 20 finance chiefs meeting in Paris endorsed parts of a plan to contain Europe’s debt crisis.

BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, advanced 2 percent in Sydney. National Australia Bank Ltd., the nation’s biggest business lender, climbed 2 percent. S-Oil Corp., South Korea’s third-largest crude refiner, surged 5.9 percent in Seoul. Sony Corp. rose 4.4 percent after profit at its Sony Ericsson Mobile Communications AB venture beat analyst estimates. Olympus Corp. tumbled 20 percent after at least five brokerages cut their ratings on the optical-equipment maker.

The MSCI Asia Pacific Index advanced 1.1 percent to 118.09 as of 9:40 a.m. in Tokyo. The gauge climbed 3.4 percent last week after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged to deliver a plan to recapitalize Europe’s banks and address Greece’s debt crisis.

“An important precondition for resolving the European credit crisis is unity of vision and commitment to find a solution,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “The comments over the weekend show some elements of both. A credible and well- executed solution is the next element, and we are yet to see this.”

Japan’s Nikkei 225 Stock Average climbed 1.5 percent and Australia’s S&P/ASX 200 Index also gained 1.6 percent. South Korea’s Kospi Index increased 1.2 percent.

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The gauge rose 1.7 percent in New York on Oct. 14 after a report showed retail sales rose more than economists estimated. The S&P 500 had its biggest weekly gain since July 2009 amid rising confidence that European policy makers are moving toward taming the region’s sovereign-debt crisis.

Retail Sales

Retail sales in the U.S. rose more than forecast in September, easing concern that slumping confidence and scant hiring will derail the biggest part of the economy.

Separately, G-20 finance ministers and central bankers concluded weekend talks in Paris, endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set an Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.

Hurdles to overcome for an accord include resistance from bankers to a deeper restructuring of Greek debt as well as disagreements between Europe’s capitals over just how to multiply the firepower of their bailout fund and recapitalize financial institutions.

‘Risk Appetite’

“We could see that G-20 countries would cooperate with European countries, which helped concern over the debt crisis recede,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors are recovering their risk appetite.”

New York-traded copper futures rose 3.1 percent on Oct. 14, while the London Metal Exchange Index of prices for six metals including copper and aluminum advanced 2.1 percent. Crude oil futures in New York gained 3.1 percent.

The MSCI Asia Pacific Index dropped 15 percent this year through Oct. 14, compared with a 2.6 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.2 times for the Stoxx 600.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net

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