Dec. 7 (Bloomberg) -- Asian stocks rose, set for a second weekly gain, after the U.S. government announced plans to limit defaults on subprime mortgages and commodity prices climbed.

Toyota Motor Corp., which gets about a third of its sales from North America, and Honda Motor Co. led exporters higher on speculation a U.S. proposal to freeze interest rates on some home loans will ease a housing slump and boost consumer spending in the world's biggest economy. PetroChina Co. and Mitsui & Co. gained after oil and copper prices advanced.

``Investors expect that governments are going to deal with the various market problems,'' said Soichiro Monji, who helps oversee $47 billion at Daiwa SB Investments Ltd. in Tokyo. ``Rising prices for commodities like oil and copper are certainly a boon for trading houses and metals producers.''

The MSCI Asia Pacific Index added 0.2 percent to 164.56 as of 6:36 p.m. in Tokyo, climbing for a third day, and heading for its highest close since Nov. 7. Japan's Nikkei 225 Stock Average added 0.5 percent. Most benchmarks in the region rose while those in Hong Kong, South Korea, Thailand, Indonesia and Malaysia fell, with Hong Kong's Hang Seng Index dropping 2.4 percent, the region's worst performer.

Toyota also gained as the yen headed for a second weekly decline, boosting the value of Japanese exporters' overseas sales. Australia's Westpac Banking Corp. rose after it raised A$247 million ($217 million) selling shares in its funds unit.

U.S. President George W. Bush said yesterday that an interest-rate freeze for subprime, or higher risk, borrowers, may help as many as 1.2 million Americans keep their homes. The agreement was negotiated by Treasury Secretary Henry Paulson and banks.

`A Huge Initiative'

Toyota, Japan's largest automaker, advanced 1.6 percent to 6,340 yen. Taiwan Semiconductor Manufacturing Co., the world's biggest maker of customized chips, climbed 1.1 percent to NT$62.60. Hynix Semiconductor Inc., the world's second-largest computer-memory maker, added 2 percent to 27,500 won in Seoul.

MSCI's regional index had dropped as much as 11 percent from its Nov. 1 record on concern rising losses tied to investments in U.S. subprime mortgages would hamper global economic growth. Japan's economy grew at a 1.5 percent annual rate in the third quarter, slower than the government initially reported, according to a report today.

The U.S. plan ``is a huge initiative which lessens the amount of distress that would otherwise be felt in the marketplace,'' said Angus Gluskie, who helps manage the equivalent of $500 million at White Funds Management in Sydney.

Honda, which generates 55 percent of its sales in North America, climbed 1.3 percent to 3,870 yen. Sharp Corp., Japan's largest maker of liquid-crystal displays, gained 2.4 percent to 1,974 yen.

Weakening Yen

Japanese exporters also rose after the yen weakened for the second week against the dollar, boosting the value of overseas sales when converted into local currency. The yen fell to as low as 111.46 per dollar, down from 110.94 at the close of trading in Tokyo yesterday and 107.56 two weeks ago.

Real-estate companies jumped on speculation Bush's policy will help loosen credit markets, making it cheaper for developers to borrow money for building projects. Mitsubishi Estate Co., Japan's biggest property developer by market value, rose 2.1 percent to 2,975 yen.

Mitsui Fudosan Co., Japan's largest developer by revenue, rose 2.3 percent to 2,865 yen.

Citic International Financial Holdings Ltd., which is controlled by China's biggest investment firm, gained 1.7 percent to $HK5.48 in Hong Kong. The company said last month that it will borrow HK$2.5 billion ($321 million) to inject into a banking unit after Moody's Investors Service said losses from structured investment vehicles may wipe out a year's profit.

Trading Companies Rise

Kookmin Bank, South Korea's biggest, advanced 3.3 percent to 66,000 won. Shinhan Financial Group Ltd., the country's second-largest financial-services company, climbed 6.2 percent to 51,300.

PetroChina, China's biggest oil company, climbed 1.8 percent to HK$15.88 in Hong Kong, its highest close in a month. Woodside Petroleum Ltd., Australia's second-largest oil producer, gained 1.3 percent to A$48.33, the highest close in a week.

Mitsui & Co., Japan's second-biggest trading company, surged 4.4 percent to 2,395 yen, its steepest increase in a week. Mitsubishi Corp., the country's largest trading company, added 2.6 percent to 3,140 yen. Both companies derive the largest portion of their profits from commodities dealing.

Hang Seng Re-Weighting

Crude oil climbed 3.1 percent to $90.23 a barrel in New York yesterday, the steepest climb since Nov. 20. Copper futures advanced 0.6 percent in after-hours trading, adding to a two-day, 0.9 percent increase.

Westpac, Australia's fourth-largest lender, rose 2.2 percent to A$28.93 after the company said it sold shares in its BT Investment Management Ltd. funds unit to shareholders and staff at A$4.80 apiece.

Hong Kong's Hang Seng Index fell for the first time in eight days in the last trading session before three new stocks joined the measure. HSBC Holdings Plc, Europe's biggest lender, which relies on North America for a third of its revenue, was the only one of the benchmark's 40 members to advance.

China Mobile Ltd., the index's biggest constituent, slid 2.3 percent to HK$142.30. Cheung Kong Holdings Ltd., the developer controlled by billionaire Li Ka-shing, lost 4.3 percent to HK$141.40.

Changes to the Hang Seng, effective after market close today, prompted funds that mirror the benchmark, such as the HK$35 billion ($4.5 billion) Tracker Fund of Hong Kong, to adjust their holdings.

China Railway Debut

Shinsegae Co., which runs South Korea's biggest discount- store chain, retreated 6.9 percent to 694,000 won. Goldman cut its recommendation on the stock to ``neutral,'' from ``buy,'' in a report. Competition is stiffening among the country's discount stores, the brokerage said.

China Railway Group Inc., the world's third-largest construction company, surged 27 percent from its sale price to HK$7.36 on its first day of trading in Hong Kong.

``This sector is the most resilient and directly exposed to China's economic growth and it's unaffected by the global economic downturn,'' said Mona Chung, who manages about $2.5 billion at Daiwa Asset Management in Hong Kong.

China Railway Group Inc. (390 HK)
Citic International Financial Holdings Ltd. (183 HK)
Honda Motor Co. (7267 JT)
Hynix Semiconductor Inc. (000660 KS)
Kookmin Bank (060000 KS)
Mitsubishi Corp. (8058 JT)
Mitsui Fudosan Co. (8801 JT)
Mitsui & Co. (8031 JT)
PetroChina Co. (857 HK)
Rio Tinto Group (RIO AU)
Sharp Corp. (6753 JT)
Shinhan Financial Group Ltd. (055550 KS)
Shinsegae Co. (004170 KS)
Taiwan Semiconductor Manufacturing Co. (2330 TT)
Toyota Motor Corp. (7203 JT)
Westpac Banking Corp. (WBC AU)
Woodside Petroleum Ltd. (WPL AU)

To contact the reporters for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net, Patrick Rial in Tokyo at prial@bloomberg.net.

Last Updated: December 7, 2007 04:39 EST