Asia Stocks, Won Gain as Japan Trade Rises; Euro Slips

"June 20 (Bloomberg) -- Asian stocks rose to a one-month high and the won strengthened for a sixth day after data showed Japanese imports soared last month and before the Federal Reserve announces whether it will take new steps to boost the economy.
The euro and oil declined.

The MSCI Asia Pacific Index rose 0.8 percent at 12:33 p.m. in Tokyo, while Standard & Poor’s 500 Index futures dropped 0.2 percent. South Korea’s currency gained 0.3 percent to 1,153.45 per dollar in its longest rally since January. The euro fell 0.2 percent to 99.95 yen and New Zealand’s dollar lost 0.4 percent to 79.52 U.S. cents. Oil dipped 0.1 percent to $83.91 a barrel.

Japan’s need for energy imports climbed in May after the world’s third-biggest economy shut nuclear plants following last year’s record earthquake and meltdowns at a facility in Fukushima. The U.S. central bank is expected to announce added stimulus measures as soon as this week’s meeting, according to 12 of the 21 primary dealers who trade with the Fed. The euro’s weakness comes before Spanish bond auctions tomorrow, which may cast doubt over the country’s funding capabilities.

“This is one of those big, long-term shifts” in Japan, said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Plc. “It was coming anyway because of the aging population and the outsourcing of production, but it’s really been accelerated by their nuclear accident and the need to now import fossil fuels.”

More than two stocks rose for every one that fell on the MSCI’s Asian index, which is set to close at the highest level since May 15. South Korea’s Kospi index rose 0.3 percent.

Hong Kong’s Hang Seng Index increased 0.4 percent and China’s Shanghai Composite Index lost 0.1 percent. Japan’s Nikkei 225 Stock Average gained 0.8 percent, and the Topix Index rose 1.3 percent, with all 33 industry groups in the measure climbing.

Trade Deficit
Japan’s trade deficit was 907.3 billion yen ($11.5 billion) in May, the finance ministry said today. The median economists estimate in a Bloomberg News survey was for a 544.4 billion yen shortfall. Exports rose 10 percent from a year earlier, while imports climbed 9.3 percent, both wider than economists had estimated.

Sumitomo Mitsui Trust Holdings Inc., Japan’s fourth-biggest bank by market value, gained 4.3 percent in Tokyo after a company official said it plans to expand overseas loans by 32 percent this year.

Sony Corp., Japan’s biggest consumer electronics maker, jumped 2.4 percent. Renesas Electronics Corp., the world’s largest maker of microcontrollers used in cars, added 2.2 percent after saying its partnership with Taiwan Semiconductor Manufacturing Co. will help it boost market share.

The MSCI Asia Pacific Index lost 10 percent through yesterday from this year’s highest level in February, leaving the gauge trading at 1.1 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

VIX Decline
The largest drop in the Chicago Board Options Exchange Volatility Index since August brought the gauge to its cheapest level of the year, a sign of increasing confidence among traders that the Fed will take action again to spur growth.

The central bank, which began a two-day meeting yesterday, will extend its so-called Operation Twist program, according to JPMorgan Chase & Co. and Jefferies & Co. It involves selling short-term debt and buying longer-term bonds. A more aggressive response could be warranted if the Fed sees high costs in an economic slowdown.

“I don’t think there will be another round of quantitative easing, but I think they’ll extend Operation Twist,” said Yoshihisa Okamoto, who helps oversee the equivalent of $34 billion at Mizuho Asset Management Co. “China has shifted toward an easing posture except in the real estate sector.”

China’s fiscal policy should be “really proactive” and macroeconomic policies readjusted in the following months to sustain faster growth, the China Daily cited a proposal from the Standing Committee of the Chinese People’s Political Consultative Conference National Committee as saying.

Spain Bonds
Spain is due to sell tomorrow debt maturing in 2014, 2015 and 2017. While the nation’s 10-year yields eased yesterday, they remain above the 7 percent level that pushed Greece, Ireland and Portugal to seek rescue packages.

The so-called kiwi declined after a report today by Statistics New Zealand showed the nation’s current-account shortfall in the three months through March widened to 4.8 percent of gross domestic product, up from a revised 4.2 percent in the previous quarter.

The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 4 basis points to 176 basis points as of 8:24 a.m. in Hong Kong, according to Credit Agricole SA. The gauge is set for its lowest close since May 8, according to data provider CMA.

Corn in Chicago fell 0.4 percent to $5.61 a bushel after jumping 11 percent in the previous two days on concern that hot, dry weather will curb yields in U.S. growing areas. Gold for immediate delivery rose 0.1 percent to $1,620.38 an ounce. "

To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net



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