Asian Stocks Rise as Europe Leaders Ease Concern

By Shani Raja - Oct 10, 2011 8:22 AM GMT+0700

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Oct. 10 (Bloomberg) -- Nick Maroutsos, a Sydney-based money manager and co-founder at Kapstream Capital, talks about the outlook for financial markets and the U.S. economy. Maroutsos speaks with Susan Li and John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)

Most Asian stocks rose, led by exporters and mining companies, after the heads of Europe’s two biggest economies pledged to shield banks from a debt crisis, easing concern the region’s troubles will derail a global economic recovery.

Rio Tinto Group, the world’s second-largest mining company by sales, gained 2.1 percent in Sydney after commodity prices climbed. Billabong International Ltd., a global surfwear maker, advanced 2.2 percent. Samsung Electronics, the world’s second- biggest maker of mobile phones, rose 2.7 percent in Seoul, while Hanjin Heavy Industries & Construction Co., which gets 62 percent of its revenue overseas, surged 14 percent.

The MSCI Asia Pacific Excluding Japan Index advanced 0.6 percent to 384.75 as of 10:12 a.m. in Tokyo. More than three stocks rose for each that fell after German Chancellor Angela Merkel said European leaders would do “everything necessary” to ensure banks have adequate capital. The gauge dropped 14 percent in September on speculation Europe’s sovereign-debt crisis and slowing U.S. economic growth may derail a global recovery.

“The Europeans have been talking a lot about doing everything they can to solve the debt crisis,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd. “But we still haven’t seen any detail. U.S. data has been coming in better than expected recently, easing fears of another recession, but we’re still in a very slow-growth environment.”

Australia’s S&P/ASX 200 Index gained 1.2 percent and South Korea’s Kospi Index added 1.1 percent. Japanese markets are closed for a public holiday.

Debt Crisis

Futures on the Standard & Poor’s 500 Index rose 1.2 percent today. In New York, the gauge fell 0.8 percent on Oct. 7 as concern Europe’s debt crisis will worsen overshadowed a faster- than-forecast growth in American employment.

Financial stocks had the biggest decline in the S&P 500 among 10 industries after Fitch Ratings downgraded Italy and Spain. The S&P 500 last week came within 1 percent of extending its decline from its April peak to 20 percent, the common definition of a bear market.

At the weekend, Germany’s Merkel joined French President Nicolas Sarkozy in trying to persuade investors they can stamp out the debt crisis roiling global markets. At a joint press conference in Berlin, Sarkozy set a deadline of the Nov. 3 Group of 20 summit to deliver a response that addresses the immediate debt crisis in Greece, and what he called the structural defects in the 17-nation euro area. No details were provided.

“There is some light optimism on the back of the statements from Sarkozy and Merkel that they will have a euro stability plan by month-end,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.

The MSCI Asia Pacific ex-Japan Index dropped 20 percent this year through Oct. 7, compared with an 8.1 percent loss for the S&P 500 and a 16 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 10.7 times estimated earnings on average, compared with 11.6 times for the S&P 500 and 9.8 times for the Stoxx 600.

To contact the reporters 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