BL: Asian Stocks Climb as Growth Optimism Overcomes Greece Concerns
By Will McSheehy
Feb. 12 (Bloomberg) -- Stocks in Asia rose, with the benchmark index set for its longest winning streak in two months, on optimism the global economic recovery will be sustained. Concern about Greek finances drove down the euro for a third day.
The MSCI Asia Pacific Index climbed 0.6 percent to 116.61 as of 12:49 p.m. in Tokyo, gaining for a fourth day. The euro weakened for a third day against the dollar and the yen. Futures on the Standard & Poor’s 500 Index dropped 0.2 percent. The cost of protecting Asian bonds from default declined.
U.S. stocks rallied and commodities gained yesterday after European Union leaders said they will support Greece, without offering a detailed plan. Lower-than-estimated U.S. jobless claims and a pledge by China’s central bank to withdraw stimulus polices gradually helped allay concern the global economic recovery will falter.
“The EU will most likely prevent Greece from abruptly defaulting on its debt, which would otherwise have adverse effects among the region’s other countries such as Portugal,” said Akio Yoshino, the chief economist in Tokyo at Societe Generale Asset Management (Japan) Inc., which manages the equivalent of $17 billion. “Companies have done terrifically at slashing costs. Once sales rise even a bit it will result in a terrific earnings recovery.”
Japan’s Nikkei 225 Stock Average advanced 0.8 percent, while Hong Kong’s Hang Seng Index rose 0.3 percent. China’s Shanghai Composite Index rose 0.3 percent, advancing for a fourth day, as raw-material producers climbed on higher commodity prices.
Material Stocks
Mitsubishi Corp., a Japanese trading company that gets 39 percent of its sales from commodities, climbed 2.9 percent in Tokyo. Sony Corp., which derives 23 percent of its sales from the U.S., added 1.7 percent. Asahi Glass Co. climbed 7 percent after forecasting profit to increase. Jiangxi Copper Co., China’s biggest producer of the metal, increased 2.3 percent as copper prices gained the most since August.
Investors pulled the most money from emerging-market equity funds in 19 months as Greece’s debt crisis escalated and the Federal Reserve laid the groundwork for exiting its record credit expansion. Outflows from emerging-market equity funds reached $2.9 billion in the week to Feb. 10, the highest since the period ended July 9, 2008, according to Cambridge, Massachusetts-based research firm EPFR Global.
“Investors fretted that Greece’s sovereign debt woes could drive up yields, and hence credit costs, worldwide,” EPFR said in a statement.
Euro, Yen
The euro approached a one-week low against the dollar, falling to as low as $1.3654 and traded at $1.3667 as of 12:43 p.m. in Tokyo. It declined to 122.61 yen as of 12:55 p.m. in Tokyo, from 122.90 in New York yesterday.
The common currency has fallen 4.5 percent against the dollar this year on concern that nations with the biggest debt burdens will struggle to meet their obligations. Greece’s deficit is 12.7 percent of gross domestic product, more than four times the EU limit.
Statements by European leaders left open how the EU will respond to a fresh wave of speculative attacks against Greece or countries such as Spain and Portugal, which are also struggling to cut budget deficits. An agreement brokered by German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and European Central Bank President Jean-Claude Trichet called for closer monitoring of the Greek economy.
The dollar strengthened versus 12 of 16 major counterparts on prospects U.S. reports today will add to signs the world’s largest economy is gaining momentum, providing the Federal Reserve with more evidence to increase borrowing costs.
Retail Sales
Sales at U.S. retailers rose 0.3 percent in January, after a 0.3 percent drop the previous month, according to a Bloomberg News survey of economists before the Commerce Department’s report today. The Reuters/University of Michigan final index of U.S. consumer sentiment, also scheduled for release today, increased to 75 this month from 74.4 in January, a separate Bloomberg survey showed.
New Zealand’s currency declined 0.3 percent to 69.67 U.S. cents. Retail sales for December were unchanged from the previous month, Statistics New Zealand said today, compared with economists’ forecasts for a 0.6 percent gain.
The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan fell 3 basis points to 113 basis points as of 8:16 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show.
Oil fell for the first day in five ahead of the release of a U.S. Energy Department report, which may show an increase in crude stockpiles in the world’s largest energy consumer. Crude oil for March delivery dropped as much as 43 cents, or 0.6 percent, to $74.85 a barrel in electronic trading on the New York Mercantile Exchange.
Copper for three-month delivery dropped 0.4 percent to $6,915 a metric ton, trimming its weekly gain to 10 percent, the most in a year. Aluminum rose 1.1 percent to $2,078 a ton and zinc gained 0.7 percent to $2,195.
To contact the reporter for this story: Will McSheehy in Singapore at wmcsheehy@bloomberg.net
Last Updated: February 11, 2010 22:59 EST
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