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Asia Stocks, Commodities Gain as Region’s Recovery Seen Intact; Won Climbs


Asian stocks snapped four days of decline while commodities and the won gained on optimism the region will continue to grow amid mounting concerns about the pace of the global recovery.

The MSCI Asia Pacific Index gained 0.2 percent to 111.90 as of 12:40 p.m. in Tokyo. Oil increased for the first time in six days and copper advanced in London for a second day. The won strengthened 0.5 percent to 1,222.15 per dollar in Seoul, after sliding 1.1 percent last week as purchasing surveys showed manufacturing growth was slowing in the U.S., Europe and China.

China’s Premier Wen Jiabao said on July 3 the government will ensure “steady and relatively fast” growth. Gains were muted by the 125,000 decline in U.S. payrolls last month and after European Central Bank President Jean-Claude Trichet said: “I have no problem with austerity, rigor. I call this good budgetary management,” by governments controlling their deficits.

“The outlook for growth around the world is certainly not as optimistic as it was a few months ago,” said Toby Hassall, a commodity analyst at CWA Global Markets Pty in Sydney. “There will be the longer-term participants in the market who are viewing this decline in price as a good time to get long.”

Advancers led decliners by 4 to 3 on the MSCI Asia index. The gauge has fallen 13 percent from its high this year on April 15 on concern Europe’s debt crisis and Chinese steps to curb property prices will hurt global growth. Companies in the measure trade at an average 13.6 times estimated profit, the lowest level since December 2008.

Investor Sentiment

“Different sentiments among investors are colliding with each other,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees $65 billion. “Stocks are relatively undervalued. Although there is uncertainty in being long on equities, some investors are giving it a go.”

Japan’s Nikkei 225 Stock Average rose 0.5 percent as the weaker yen boosted Japanese companies’ revenue from overseas. Canon Inc., which gets 78 percent of sales from overseas, gained 0.8 percent. Sony Corp., the maker of PlayStation gaming consoles and Bravia TVs, rose 1.3 percent. Panasonic Corp., the world’s largest maker of plasma TVs, climbed 1.3 percent.

Taiwan’s Taiex advanced 0.7 percent, while the Shanghai Composite Index retreated 1.6 percent. Futures on the Standard & Poor’s 500 Index rose 0.2 percent. U.S. markets will be closed today for the Independence Day holiday.

Acom Co. led a surge in Japanese consumer lenders after the Mainichi newspaper said the Osaka government will seek to start a business zone with looser lending rules than national laws. Acom soared 24 percent. Credit Saison Co. jumped 8.4 percent.

Mergers and Acquisitions

Centennial Coal Co. surged 33 percent in Sydney after Banpu Pcl agreed to buy the 80 percent of Centennial it doesn’t already own. CSR Ltd., Australia’s No. 2 building-products maker, climbed 3.2 percent after agreeing to sell its Sucrogen sugar unit to Wilmar International Ltd. for A$1.75 billion ($1.5 billion). China Cosco Holdings Co., the nation’s biggest shipping company by market value, fell 2.8 percent as the Baltic Dry Index, a measure of commodity-shipping costs, extended the longest losing streak since August 2005.

Crude oil rose 0.5 percent to $72.48 a barrel in New York, recovering from its biggest weekly decline in eight. Copper for three-month delivery climbed as much as 1.8 percent to $6,528 a metric ton on the London Metal Exchange.

Goldman Boosts Won

The won strengthened for the first time in five days, leading gains among regional currencies, after Goldman Sachs Group Inc. raised its 2010 economic growth forecast.

The Bank of Korea will keep its benchmark interest rate at a record-low 2 percent at a review this week, according to seven of 10 economists surveyed by Bloomberg. Three predicted a quarter of a percentage point increase.

The euro declined from near its strongest level in six weeks amid speculation the sovereign debt crisis in Europe will force the region’s central bank to keep interest rates at a record low.

Trichet pressed governments to trim their budget deficits, saying such action would boost economic growth by improving confidence of consumers and investors.

The comments yesterday reinforce plans set out by Group of 20 leaders last month in Toronto, where the countries representing 85 percent of the world economy responded to plans by European governments to tackle the region’s sovereign debt crisis by slashing budget deficits.

The euro fell to $1.2544 in Tokyo, from $1.2566 on July 2, when it reached $1.2612, the most since May 21. The yen traded at 87.90 per dollar from 87.75 last week in New York, after climbing to 86.97 on July 1, the strongest since Dec. 2. It bought 110.13 per euro from 110.27.

“The ECB will be forced into a lower-for-longer stance on its monetary policy,” said Sue Trinh, a senior currency strategist in Hong Kong at Royal Bank of Canada. “We are still very bearish on the euro and expect a move toward $1.15 by the end of the year.”