May 29 (Bloomberg) -- Asian stocks advanced for a second day after reports in Japan showed an unexpected drop in unemployment and a rise in household spending.

Mizuho Financial Group Inc. climbed to a three-month high, on speculation the improving economy will allow the Bank of Japan to lift interest rates, widening lenders' profit margins. China's CSI 300 Index rose to its third straight record as households poured more money into equities, drawn by a rally that's made the benchmark the world's best performer this year.

``The positive economic data from Japan is helping sentiment for the rest of the region,'' said Leslie Phang, who helps manage about $1 billion at Commonwealth Private Bank in Singapore. ``China's continued rally also augurs well for Asia as a sudden sell-off will spook investors.''

The Morgan Stanley Capital International Asia-Pacific Index added 0.7 percent to 149.26 at 8:01 p.m. in Tokyo. Technology stocks rose after Sanyo Electric Co. forecast its first annual profit in four years and CJ Investment & Securities Co. said earnings at LG.Philips LCD Co. will improve.

Japan's Nikkei 225 Stock Average climbed 0.5 percent to 17,672.56, while the broader Topix index gained 0.8 percent. Mitsui O.S.K. Lines Ltd. advanced after UBS AG reaffirmed its bullish stance on shipping companies.

BHP Billiton Ltd. led mining stocks higher in Australia as prices of metals including copper advanced and on speculation of takeovers within the industry. Coles Group Ltd. dropped after U.S. buyout company Kohlberg Kravis Roberts & Co. abandoned its nine-month pursuit of the Australian retailer.

Benchmarks rose, except in Hong Kong, Indonesia, Malaysia, Pakistan and Sri Lanka. Thailand was little changed.

Mizuho Rises

The U.S. stock market was closed yesterday for the Memorial Day holiday. Nine of the 18 western European markets, including the U.K. and Germany, were also shut for holidays.

Japan's Topix banks index accounted for 27 percent of the benchmark's climb, the most of any single industry group. Mizuho, Japan's second-largest lender by assets, rose 2.3 percent to 864,000 yen, its highest close since Feb. 23. Sumitomo Mitsui Financial Group Inc., the third largest, advanced 1.7 percent to 1.18 million yen.

Japan's unemployment rate declined to 3.8 percent from 4 percent, where it had been stuck since November, the statistics bureau said today in Tokyo. The median estimate of 34 economists surveyed by Bloomberg News was for the number to stay unchanged. Household spending rose 1.1 percent, the bureau said separately, more that the 0.2 percent median expectation of 35 economists.

``Today's jobs data was broadly encouraging,'' said Jeremy Hall, who helps oversee $3.5 billion at Henderson Global Investors Ltd. in Singapore. ``These things conspire to indicate Japan can surprise on the upside. There are reasonable hopes for a better consumption outlook this year than last year.''

Shifting Funds

China's CSI 300 rose 2.4 percent to a record. The value of shares traded on the Shanghai and Shenzhen stock exchanges was a record $50.9 billion yesterday, exceeding the $43.9 billion that changed hands on the New York Stock Exchange on May 25.

Gemdale Corp., a Chinese developer that's partnered with ING Groep NV, gained 10 percent to 31.13 yuan. Datong Coal Industry Co., China's second-largest coal company by capacity, surged 10 percent to 26.47 yuan.

Households are shifting funds into the stock market, seeking better returns than they can get on their bank deposits. The central bank's benchmark one-year deposit rate, a ceiling for deposit rates commercial banks can offer, is 3.06 percent, little more than the nation's 3 percent inflation rate.27

New Investors

A Shanghai Securities News report said the tally of China's brokerage accounts may have reached 100 million as of yesterday, citing its own estimate. China had 99.82 million accounts as of

``Liquidity keeps flowing into the market as a result of the entry of some new investors,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages about $517 million. ``There is still room for the upside on the market.''

Sanyo, the world's largest maker of rechargeable batteries, jumped 10 percent to 213 yen. The company yesterday forecast a net income of 20 billion yen ($164 million) this fiscal year, after reporting a 45.4 billion yen net loss in the year ended March 31. Fourth-quarter loss shrank by 50 percent to 34.4 billion yen, Sanyo said.

LG.Philips

LG.Philips, the world's second-largest maker of liquid- crystal displays, climbed 2 percent to 38,750 won. The company may post a second-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, of 49 billion won ($52.8 million), compared with a loss in the previous year, wrote Song Myung Sup, an analyst at CJ Investment, in a report today.

LG.Philips' operating profit may then jump to 302.7 billion won in the third quarter as an undersupply of panels will drive price increases, Song wrote.

``Prices for liquid-crystal displays are very firm and there's anticipation for demand growth,'' said Chung Yun Sik, who oversees $7 billion at Daehan Investment Trust Management Co. in Seoul.

Mitsui O.S.K., Japan's second-largest shipping line, rose 1.5 percent to 1,603 yen. Nippon Yusen K.K., the biggest, added 1.3 percent to 1,092 yen, while Kawasaki Kisen Kaisha Ltd. jumped 2.2 percent to 1,431 yen.

``We maintain our bullish stance on the three Japanese marine transport stocks,'' Jun Harada, an analyst at UBS wrote in a note to investors today. ``Demand will remain tight over the next few years'' for bulk transportation.

UBS raised its price target for shares of Mitsui O.S.K. by 27 percent to 1,900 yen and on Nippon Yusen stock by 18 percent to 1,300 yen. It increased Kawasaki Kisen's target price by 31 percent to 1,700 yen.

Mining Stocks

BHP Billiton, the world's biggest mining company, gained 1.8 percent to A$31.70. Rio Tinto Group, the third largest, climbed 2.4 percent to A$96.36.

Copper prices on the Shanghai Futures Exchange today rose 0.4p ct, after it yesterday climbed by the daily limit for the third time this month. Futures on the London Metal Exchange rose 1.7 percent in early trade today.

Mining stocks rallied worldwide yesterday, led by Alcan Inc. on a Globe and Mail report that Oslo-based Norsk Hydro ASA is preparing a bid valued at more than $30 billion. That would trump Alcoa Inc.'s offer for the world's second-biggest aluminum company.

``The earnings of the bigger mining companies like BHP are underpinned by their diversity as well as the generally high level of metals prices,'' said Rob Patterson, who manages $3.2 billion at Argo Investments Ltd. in Adelaide. ``Mergers are an unknown factor at the moment but you can see why it may be supportive of the shares, at least in the short term.''

Coles Group

Coles Group, Australia's second-largest retailer, dropped 4.2 percent to A$16.65. KKR quit a buyout group considering making an offer for Coles Group a day after CVC Asia Pacific Ltd. decided to walk away.

Ian Smith, a spokesman for the companies including Carlyle Group, TPG Inc., Blackstone Group LP and Bain Capital LLC, confirmed KKR has withdrawn from the group.

A buyout group led by Wesfarmers Ltd. started due diligence May 25. Wesfarmers stock gained 0.7 percent to A$38.04.

Meanwhile, Samsung Electronics Co., the world's largest memory-chip maker, lost 2 percent to 537,000 won. Hynix Semiconductor Inc., the world's second-largest memory chipmaker, dropped 2.4 percent to 28,650 won.

Global sales growth of memory chips used in computers will slow until March 2008 because shipment increases are driving down prices, El Segundo, California-based researcher iSuppli Corp. said today.

BHP Billiton Ltd. (BHP AU)
Coles Group Ltd. (CGJ AU)
Datong Coal Industry Co. (601001 CH)
Gemdale Corp. (600383 CH)
Hynix Semiconductor Inc. (000660 KS)
Kawasaki Kisen Kaisha Ltd. (9107 JT)
LG.Philips LCD Co. (034220 KS)
Mitsui O.S.K. Lines Ltd. (9104 JT)
Mizuho Financial Group Inc. (8411 JT)
Nippon Yusen K.K. (9101 JT)
Rio Tinto Group (RIO AU)
Samsung Electronics Co. (005930 KS)
Sanyo Electric Co. (6764 JT)
Sumitomo Mitsui Financial Group Inc. (8316 JT)
Wesfarmers Ltd. (WES AU)

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Chua Kong Ho in Singapore at kchua6@bloomberg.net

Last Updated: May 29, 2007 07:04 EDT