Asian Stocks, Won Advance on Europe Optimism

By Lynn Thomasson and Yoshiaki Nohara - Jan 13, 2012 11:43 AM GMT+0700

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Jan. 13 (Bloomberg) -- Lim Say Boon, chief investment officer of DBS Group Holding Ltd.’s wealth management business in Singapore, talks about China stocks. He also discusses Europe's sovereign debt crisis and its implications for global financial markets. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks rose to a one-month high and South Korea’s won strengthened on signs Europe’s debt crisis is easing. Oil was set for the biggest weekly drop in a month as an embargo against Iran was said to face delays.

The MSCI Asia Pacific Index climbed 0.6 percent as of 1:16 p.m. in Tokyo, set for a fourth weekly gain. The Nikkei 225 (NKY) Stock Average rose to a one-week high, while Standard & Poor’s 500 futures were little changed. The won advanced against all 16 major peers. Oil added 0.6 percent, after sliding 1.8 percent yesterday. Copper, zinc and nickel fell at least 0.6 percent.

Asian stocks are poised for the longest run of weekly gains in a year, led by energy producers, retailers and automakers. Borrowing costs for Spain and Italy fell at debt sales yesterday, while European Central Bank President Mario Draghi said he saw “tentative signs” of stabilization in the euro region. Data today is expected to show U.S. consumer confidence is at a seven-month high, based on the median forecast in a Bloomberg survey of economists.

ECB policy makers “have stabilized the whole situation,” said Diane Lin, a fund manager at Sydney-based Pengana Capital Ltd., which manages about $1.1 billion. “We should see some good performances in Asian equity markets.”

The MSCI Asia Pacific Index (MXAP) has rallied 8.7 percent from a two-year low reached in October, pushing valuations to 12.3 times estimated profit, based on data compiled by Bloomberg. More than three stocks gained for every two that fell in the index today. The Nikkei 225 advanced 1.1 percent and Australia’s S&P/ASX 200 added 0.3 percent.

China Stocks

The S&P 500 rose in each of the last four days, closing yesterday at the highest level since July. JPMorgan Chase & Co., the most profitable U.S. bank, is scheduled to report earnings today and Wells Fargo & Co., Citigroup Inc. and Goldman Sachs Group Inc. will release results next week.

The Shanghai Composite Index slid 1.8 percent, the most in a month. The gauge has fallen for the past three days as Credit Suisse Group AG and Royal Bank of Scotland Group Plc said inflation would hamper the government’s ability to ease monetary policy.

“An immediate reserve-ratio cut probably won’t come soon given policy makers’ concern about a possible rebound in inflation,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million.

Belle International Holdings Ltd. (1880) tumbled 8.6 percent in Hong Kong, poised for the biggest drop in three months. China’s biggest shoe retailer reported slower same-store sales growth.

Oil, Gas

Crude oil rose for the first time in three days. Nigerian labor unions said yesterday they will continue a strike that threatens oil exports from Africa’s top producer because no agreement has been reached yet with President Goodluck Jonathan on restoring fuel subsidies.

Oil declined 1.7 percent this week. A European Union embargo on imports of Iranian oil will probably be delayed for six months to let countries such as Greece, Italy and Spain find alternative supplies, according to an EU official with knowledge of the talks.

Natural gas futures in New York fell for a fifth day to trade near the lowest price in more than two years. Gas for February delivery slipped 0.5 percent to $2.684 per million British thermal units on the New York Mercantile Exchange.

Copper, Corn

Copper for delivery in three months declined 0.9 percent to $7,937 a metric ton on the London Metal Exchange, falling for the first time in four days. Zinc retreated 1.1 percent to $1,946 per ton. Nickel lost 0.6 percent to $19,550 a ton.

Corn declined for a third straight day, extending the worst slump in three months, after the U.S. government unexpectedly increased its global supply estimate. March-delivery corn declined as much as 1.1 percent on the Chicago Board of Trade to $6.05 a bushel, the lowest price for the most-active contract since Dec. 21. The contract plunged 6.1 percent yesterday, the most since Sept. 30.

Global production will exceed demand for the first time in three years as higher harvests in the U.S., the largest grower, Russia, Ukraine and the European Union more than offset losses in Argentina, the U.S. Department of Agriculture said yesterday.

The euro is poised to rise 0.8 percent against the dollar this week, the first advance since the period ended Dec. 2. The 17-nation currency was little changed today at $1.2820 before Italy sells bonds due in 2014 and 2018.

“The European liquidity operations are having a positive effect on risk appetite at the moment,” Chris Weston, an institutional trader at IG Markets Ltd. in Melbourne. “The bond auctions are becoming more positive and yields are declining and that’s having a positive impact on euro.”

Taiwan Election

The won advanced 0.8 percent to 1,149.55 per dollar after the Bank of Korea kept borrowing costs unchanged at 3.25 percent for a seventh month to support the economy. Taiwan’s dollar rose toward a two-month high on speculation President Ma Ying-jeou, who has improved economic ties with China, will be re-elected tomorrow. The currency gained 0.1 percent to NT$29.97 versus the greenback.

The cost of protecting Asia-Pacific corporate and sovereign bonds from non-payment fell, according to traders of credit- default swaps. The Markit iTraxx Asia index of 40 investment- grade borrowers outside Japan declined four basis points to 203, Royal Bank of Scotland Group Plc prices show. That would be the lowest close since Jan. 4, according to data provider CMA.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: James Regan in Hong Kong at jregan19@bloomberg.net