"June 6 (Bloomberg) -- Asian stocks gained for a second day and oil climbed, while the Australian dollar rallied after the country’s economy grew at twice the rate economists estimated and a gauge of U.S. services industries increased. Aluminum rose as metals in London resumed trading after a holiday.
The MSCI Asia Pacific Index added 1.1 percent at 12:55 p.m. in Tokyo. The Nikkei 225 Stock Average climbed 1.6 percent. Standard & Poor’s 500 Index futures advanced 0.7 percent. The so-called Aussie strengthened 1.2 percent against the U.S. dollar, poised for the biggest gain in almost two months. The euro rose 0.4 percent against the greenback. Oil advanced 0.9 percent in New York, while aluminum increased 0.7 percent.
Australia’s gross domestic product advanced 1.3 percent in the last quarter from the previous three months, a Bureau of Statistics report showed, compared with the median 0.6 percent gain predicted by economists in a Bloomberg News survey. U.S. service industries sustained their pace of growth in May, showing the biggest part of the U.S. economy is withstanding the impact of the European debt crisis.
“Expectations for growth have been tempered to such a degree that economic data points are going to surprise to the upside,” said Stephen Corry, Hong Kong-based chief investment strategist at LGT Group, which oversees $12 billion of Asian assets. “There’s potential for more policy stimulus and markets are clearly oversold.”
Interest Rates
The Group of Seven nations yesterday agreed to coordinate their response to Europe’s turmoil, which has tipped at least eight of the 17 euro-area economies into recession. European representatives “said they will speed up their efforts to resolve those problems, which was encouraging to us,” Japanese Finance Minister Jun Azumi told reporters in Tokyo.
The European Central Bank will leave the benchmark rate at 1 percent today, according to 32 of 44 economists surveyed by Bloomberg News.
The MSCI Asia Pacific Index trades at 11.2 times its companies’ estimated earnings, the lowest valuation since October 2008, weekly data compiled by Bloomberg show. The gauge plunged 15 percent from a six-month high in February through June 4 as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
“There’s been an excess of risk-off sentiment in stocks and commodities and so we’re having a little rebound,” said Toshio Sumitani, a strategist at Tokai Tokyo Financial Holdings Inc.,a Tokyo-based securities firm. “Tonight the ECB has a policy meeting and investors are hoping they’ll offer something to the markets. The economy, whether it’s in Japan or the U.S., hasn’t gotten bad enough to justify where we are.”
Asian Currencies
Asian currencies rose the most in eight weeks. Malaysia’s ringgit climbed 0.8 percent to 3.1760 per dollar, the Thai baht strengthened 0.5 percent to 31.47 and the Philippine peso added 0.6 percent to 43.29. The Bloomberg-JPMorgan Asia Dollar Index strengthened 0.2 percent, the most since April. The gauge lost 2.8 percent in May in its worst drop since September.
The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the world’s largest economy, increased to 53.7, topping the median projection of economists for a reading of 53.4.
Spain may receive a precautionary credit line from the European Financial Stability Facility, Germany’s Die Welt newspaper reported in a preview of a story that will run today, citing unidentified people familiar with talks about the possible option.
Chinese Developers
Country Garden Holdings Co. climbed 6.5 percent, pacing gains by Chinese developers in Hong Kong, after Deutsche Bank AG said the nation’s home sales in May probably reached the highest value since last June. China should cut interest rates at an “appropriate time” to avoid a deep growth slump, the state-run China Securities Journal said in a front-page commentary today.
Commerzbank AG, Germany’s second-largest bank, had its credit rating cut one level today as Europe’s debt crisis prompted Moody’s Investors Service to downgrade seven lenders in the nation and three in Austria. Commerzbank, based in Frankfurt, was reduced to A3 from A2, Moody’s said in a statement. A review of Deutsche Bank, the nation’s largest lender, will be concluded later, Moody’s said.
Oil for July delivery rose to $84.96 a barrel, a third day of gains. Inventories fell 1.8 million barrels last week, the industry-funded American Petroleum Institute said after yesterday’s close. Three-month delivery aluminum climbed to $1,986 a metric ton on the London Metal Exchange. The LME reopened after two days of holidays.
The cost of insuring Asia-Pacific corporate and sovereign bonds from default decreased, according to traders of credit- default swaps. The Markit iTraxx Asia index of 40 investment- grade borrowers outside of Japan declined three basis points to 202, on course for the lowest close since May 31, according to Credit Agricole and CMA prices.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net ; Adam Haigh in Sydney at ahaigh1@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
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