Asian Stocks Swing Between Gains, Losses Ahead of Europe Crisis Summits

By Yoshiaki Nohara and Masaaki Iwamoto - Oct 21, 2011 12:39 PM GMT+0700

Asian stocks swung between gains and losses on speculation European policy makers will struggle to reach a resolution while they consider deploying $1.3 trillion to fight the region’s debt crisis.

Fanuc Corp. (6954), a Japanese manufacturer of industrial robots that gets 75 percent of its sales abroad, rose 2.2 percent after an index of manufacturing in Philadelphia unexpectedly increased. Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer memory chips, rose 8.6 percent in Seoul after a research company said Apple Inc. used the company’s NAND-flash chips in the iPhone for the first time. Mitsui & Co. led losses in Japanese traders as commodity prices headed for the first weekly loss in three weeks.

The MSCI Asia Pacific Index rose 0.3 percent to 115.51 at 2:37 p.m. in Tokyo after falling as much as 0.3 percent. About half of the stocks on the benchmark gauge rose ahead of a European debt summit this weekend. The measure has dropped 1.4 percent this week.

“It looks like European leaders are making progress, but there’s still a long way to go,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The market remains very vulnerable.”

Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The index rose 0.5 percent yesterday in New York after a report that Europe may combine temporary and permanent rescue funds to make as much as 940 billion euros ($1.3 trillion) available to fight the crisis, according to two people familiar with the matter.

Second Summit

Gains were limited on concern European policymakers will struggle to reach a resolution at the Oct. 23 summit. German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement they want agreement on a “comprehensive and ambitious” plan as the European Union prepares for a second summit within three days of this weekend’s meeting.

“There’s a lot of information and a lot of uncertainty whether this weekend’s meeting will come out with a definitive plan or there’s more to come after that,” Colonial’s Halmarick said.

Factory-machinery makers rose after the Federal Reserve Bank of Philadelphia’s general economic index increased to 8.7 from minus 17.5 last month, the biggest one-month rebound in 31 years.

Fanuc gained 2.2 percent to 12,150 yen. Mitsubishi Electric Corp., which makes 25 percent of revenue from factory automation equipment, rose 2.3 percent to 709 yen.

Japan’s Nikkei 225 Stock Average fell 0.1 percent after rising as much as 0.2 percent. Australia’s S&P/ASX 200 lost 0.1 percent. Hong Kong’s Hang Seng Index (HSI) was little changed after swinging between a gain of 0.6 percent and a drop of 0.3 percent.

Samsung, Hynix

South Korea’s Kospi Index (KOSPI) added 1.7 percent on speculation the nation’s earnings will withstand a slowdown in the global economy. Samsung Electronics Co., the world’s second-biggest handset maker, rose 1.2 percent to 918,000 won on a Wall Street Journal report that its smartphone shipments beat Apple Inc’s in the last quarter.

Hynix Semiconductor rose 8.6 percent to 22,850 won in Seoul after research company IHS iSuppli said Apple used the company’s NAND-flash chips in the iPhone for the first time.

LG Display Co., the world’s second-largest maker of liquid- crystal displays, jumped 6.7 percent to 24,000 won after analysts from LIG Investment & Securities Co. and Hyundai Securities Co. said losses will narrow in the current quarter.

The MSCI Asia Pacific Index declined 16 percent this year through yesterday amid concern Europe’s debt crisis will damage the banking system and U.S. growth is sputtering. That compares with slides of 3.4 percent by the S&P 500 and 16 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.7 times estimated earnings on average, compared with 12.2 times for the S&P 500 and 10 times for the Stoxx 600.

Japanese trading companies fell after the Thomson Reuters/Jefferies CRB Index of raw materials fell 1 percent yesterday, set for a 3 percent weekly loss. Mitsui & Co. dropped 3.8 percent to 1,051 yen, while Mitsubishi Corp. (8058) slid 2.8 percent to 1,474 yen, while Itochu Corp. (8001) lost 2.2 percent to 728 yen.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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