Dec. 3 (Bloomberg) -- Asian stocks rose for a third day, led by Mitsubishi UFJ Financial Group Inc. and National Australia Bank Ltd., on speculation the Federal Reserve will cut U.S. interest rates to bolster growth in the world's largest economy.

Sun Hung Kai Properties Ltd. led gains by developers in Hong Kong as lower borrowing costs would spur demand for real estate. Hong Kong's interest rates typically move in step with those in the U.S. because the currency is pegged to the dollar. Banks also climbed on speculation U.S. Treasury Secretary Henry Paulson will reach an agreement to stem further credit-market losses.

``There's a perception the Fed is getting ahead of the curve and as a result the U.S. economy won't fall into recession,'' said Troy Angus, who helps manage the equivalent of $3.5 billion at Paradice Investment Management Ltd. in Sydney.

The MSCI Asia Pacific Index gained 0.2 percent to 162.21 at 6:33 p.m. in Tokyo. Japan's Nikkei 225 Stock Average fell 0.3 percent to 15,628.97, and the broader Topix was little changed. Most benchmarks across the region rose.

Toyota Motor Corp. led Japan's exporters lower after the yen strengthened against the dollar, while Mitsui & Co. and Cnooc Ltd. paced a retreat by energy-related stocks as oil traded below $90 a barrel.

Mitsubishi UFJ, Japan's largest publicly traded bank, gained 2.7 percent to 1,118 yen. Mizuho Financial Group Inc., the second-biggest, added 2.2 percent to 608,000 yen. Japan's banks had 1.3 trillion yen ($12 billion) in investments related to U.S. subprime-mortgage markets as of Sept. 30, the nation's chief financial regulator said on Nov. 22.

`Everything We Can'

``We're moving as fast as we can move,'' Paulson, who is scheduled to speak today at a housing conference, told ABC News in an interview posted on its Web site on Nov. 30. ``We need to do everything we can to help get the industry ready to meet the growing number of resets that are going to be coming in the subprime mortgage market.''

National Australia, the country's biggest bank, advanced 1.3 percent to A$38.80. DBS Group Holdings Ltd., Singapore's No. 1 lender, gained 1.5 percent to S$20.40. United Overseas Bank Ltd., the city's second-largest, added 0.5 percent to S$19.90.

Singapore's total loans increased 15.5 percent in October from a year earlier after climbing 12.8 percent the previous month, the Monetary Authority of Singapore said on Nov. 30.

``Singapore's banks have been enjoying solid loan growth,'' said Daphne Roth, vice president of equity research at ABN Amro Private Banking in Singapore. The news on Paulson, ``along with the hopes of a 25 basis point rate cut by the Fed, would definitely help market sentiment.'' One hundred basis points equals 1 percentage point.

Hong Kong Developers

Sun Hung Kai Properties, Hong Kong's largest real-estate developer, gained as much as 5.2 percent to a record before closing up 0.6 percent to HK$162.20. Cheung Kong (Holdings) Ltd., a developer controlled by Li Ka-Shing, China's richest man, added 2.6 percent to HK$150.10.

Lower borrowing costs make it cheaper to finance mortgages. Hong Kong's policymakers typically move rates in step with the Fed to maintain the Hong Kong dollar's peg to the U.S. dollar. Fed funds futures show traders see a 100 percent chance the U.S. central bank will cut rates on Dec. 11.

In Japan, Toyota, the world's biggest automaker by market value, dropped 0.8 percent to 6,190 yen. It made 37 percent of its revenue from North America in the last business year. Canon, the maker of digital cameras that gets a third of its sales from the U.S., slid 0.8 percent to 5,760 yen. Sony Corp., the second- biggest maker of consumer electronics, declined 0.8 percent to 5,960 yen. The company derives about half of its sales outside of Japan.

The Japanese currency strengthened to as much as 110.49 versus the dollar, compared with 111.24 in New York on Nov. 30. A stronger yen decreases the value of exporters' overseas sales when converted into local currency.

Oil Below $90

Mitsui & Co., Japan's second-biggest trading house, fell 2.2 percent to 2,475 yen, its first decrease in three days. Woodside Petroleum Ltd., Australia's No. 2 oil producer, slid 1 percent to A$48.02. PetroChina Co., the world's largest company by market value, declined 0.3 percent to HK$14.98. Cnooc, China's biggest offshore oil producer, dropped 2.2 percent to HK$14.04, the largest single negative contributor to the Hang Seng index in Hong Kong.

Crude oil fell 2.5 percent to $88.71 on Nov. 30 in New York, rounding off its biggest weekly loss in 2 1/2 years. The contract was recently at $88.87 in after hours trading on the New York Mercantile Exchange.

China Railway Group, the world's third-largest construction company, surged 69 percent to 8.09 yuan in its first day of trading in Shanghai.

Sekisui House Ltd., Japan's largest homebuilder, tumbled 5.2 percent to 1,342 yen, the most since March 2006 and the seventh- biggest percentage decline on the MSCI World Index today. The company had a net loss of 10.7 billion yen in the three months ended Oct. 31, from 4 billion year a earlier.

Canon Inc.  (7751 JT)
Cheung Kong (Holdings) Ltd. (1 HK)
China Railway Group (390 HK)
DBS Group Holdings Ltd. (DBS SP)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mitsui & Co. (8031 JT)
Mizuho Financial Group Inc. (8411 JT)
National Australia Bank Ltd. (NAB AU)
PetroChina Co. (857 HK)
Sekisui House Ltd. (1928 JT)
Sony Corp.  (6758 JT)
Sun Hung Kai Properties Ltd. (16 HK)
Toyota Motor Corp. (7203 JT)
United Overseas Bank Ltd. (UOB SP)
Woodside Petroleum Ltd. (WPL AU)

To contact the reporter on this story: Chua Kong Ho at in Shanghai or kchua6@bloomberg.net.

Last Updated: December 3, 2007 04:35 EST