Asian Stocks Rise on European Bank Plans

By Yoshiaki Nohara - Oct 27, 2011 8:15 AM GMT+0700

Asian stocks swung between gains and losses after Europe reached an accord on plans to recapitalize banks while talks with lenders on bondholder losses as part of a second Greek bailout ran aground.

Sumitomo Mitsui Financial Group Inc., Japan’s second- biggest lender, fell 0.6 percent, reversing earlier gains. Komatsu Ltd., Japan’s largest construction machinery maker, gained 0.6 percent after orders for U.S. durable goods excluding transportation equipment increased. Hyundai Motor Co., South Korea’s No. 1 carmaker by market value that gets 58 percent of its revenue abroad, advanced 0.5 percent.

“The situation in Europe is still very fluid and we still have to see exactly what is decided,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. “At this stage, different information and stories are coming off of different sources. Until that’s decided, we can’t really know what will happen.”

The MSCI Asia Pacific Index gained fell 0.1 percent to 119.11 as of 10:14 a.m. in Tokyo after rising as much as 0.4 percent. The measure dropped 0.2 percent yesterday. About the same number of stocks on the index gained and fell with eight of 10 groups climbing.

Debt Writedown

French President Nicolas Sarkozy and German Chancellor Angela Merkel want to meet Greek creditors in Brussels to break a deadlock of the terms of a debt writedown, said a person familiar with the matter. Sarkozy plans to call Chinese leader Hu Jintao today to discuss China contributing to a fund European leaders may set up to bolster its debt-crisis fight, according to a person familiar with the matter.

Japan’s Nikkei 225 Stock Average added 0.1 percent and South Korea’s Kospi Index gained 0.4 percent.

Trading in Australia was halted by a technical problem five minutes after the open at 10 a.m. Sydney time. Matthew Gibbs, a spokesman for bourse operator ASX Ltd., said by telephone the exchange is working on the problem, though is unsure when trading will resume.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. In New York, the index added 1.1 percent yesterday after European Union leaders reached an agreement on a plan to recapitalize banks even as talks on bondholder losses hit an impasse. The European leaders convened for the second summit in four days -- and the 14th in 21 months -- amid mounting global exasperation over their failure to extinguish the two-year-old crisis that threatens to ravage Italy and France and brake the world economy.

Europe’s situation “is certainly clearer than we’ve had over the past few days,” said Stan Shamu, a strategist at IG Markets in Melbourne. “This does seem a little bit more positive, and we’ve also got positive economic data out of the U.S., and that did really boost sentiment.”

U.S. durable goods excluding transportation equipment rose in September by the most in six months. Another report showed purchases of new houses increased more than forecast in September as discounted prices lured buyers in some parts of the country.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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