Oct. 20 (Bloomberg) -- Asian stocks advanced, led by banks and energy shares, after South Korea's government announced Asia's biggest financial rescue package and oil prices climbed for a second day.

Hana Financial Group Inc., which controls South Korea's fourth-largest bank, surged 8.4 percent after the government guaranteed $100 billion of lenders' foreign-currency debt. Fubon Financial Holding Co. added 6.7 percent after agreeing to buy ING Groep NV's life insurance unit in Taiwan. BHP Billiton Ltd. climbed 7.7 percent on speculation OPEC will cut output. Nissan Motor Co. rose 8.9 percent after UBS AG recommended the shares.

``Government policies enacted so far have been enough to make sure that the worst of the panic is behind us,'' said John Vail, who helps oversee about $118 billion as global strategy head at Nikko Asset Management Co. ``We do feel uncomfortable being underweight equities when valuations are so low.''

The MSCI Asia Pacific Index rose 3.7 percent to 90.48 as of 6:46 p.m. in Tokyo. The gauge is still down 43 percent for the year, set for its worst annual performance since the benchmark was created in 1987.

Shares in the Asian benchmark were valued at 10 times trailing earnings, near a record low reached on Oct. 10. The gauge was valued at 19.5 times earnings when it reached a peak on Nov. 1.

About $30 trillion has been wiped off global stock benchmarks since the high on Oct. 31 last year as the subprime mortgage crisis toppled financial institutions and spread to economies throughout the world.

Kospi, CSI 300

Japan's Nikkei 225 Stock Average added 3.6 percent to 9,005.59. South Korea's Kospi index advanced 2.3 percent. Standard & Poor's 500 Index futures rose 3.2 percent in recent trading.

Most other Asian markets advanced. Hong Kong's Hang Seng index gained 5.3 percent, the most among regional indexes as China cut transaction fees on home sales, boosting developers. Mainland China shares jumped, boosting the CSI 300 index by 3.5 percent, on speculation the slowest growth in five years will prompt the government to accelerate efforts to bolster the world's fourth-largest economy.

Hana Financial climbed 8.4 percent to 22,000 won. Shinhan Financial Group Ltd., South Korea's second-largest financial company, added 5.3 percent to 35,500 won. Mitsubishi UFJ Financial Group Inc., Japan's largest lender, gained 5.3 percent to 800 yen. National Australia Bank Ltd., the nation's largest bank by assets, rose 6.4 percent to A$22.98.

Under South Korea's rescue plan the government will provide $30 billion in U.S. dollars to banks and provide tax benefits for long-term equity investors.

U.S., Europe

The measures came a week after governments in the U.S. and Europe pledged $2 trillion to bail out financial companies and governments guaranteed bank deposits.

``We can expect to see a significant stabilization of the financial markets by the end of this month or the beginning of the next,'' said Kim Young Il, who oversees the equivalent of $6.5 billion as head of equities at Korea Investment Trust Management Co. in Seoul.

The cost of protecting Japanese and Australian corporate bonds from default declined, according to traders of credit- default swaps. Meanwhile, interbank funding costs in Australia dropped to the lowest level since Lehman Brothers Holdings Inc. collapsed on Sept. 15.

Hong Kong's three-month interbank lending rate, or Hibor, fell 53 basis points to 3.66 percent, the lowest since Sept. 29, after an injection of funds by the city's de-facto central bank.

Philippines Reserves

Fubon Financial advanced 6.7 percent to NT$19.05. The company will issue new shares to pay for a $600 million purchase of ING's Taiwan insurance unit, increasing its customer base by a third.

BHP, Australia's biggest oil producer, rose 7.7 percent to A$26.49, the first gain in four days. Woodside Petroleum Ltd., the second largest, jumped 6.4 percent to A$38.31. Marubeni Corp., which generates more than a quarter of its revenue from energy, climbed 5.2 percent to 406 yen.

Crude oil for November delivery gained as much as 3 percent to $74.00, extending a 2.9 percent advance on Oct. 17. The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world's oil, favors reducing production, according to Chakib Khelil, the group's president.

Poly Real Estate

In China, Poly Real Estate Group Co., the nation's second- largest property company, climbed 6.2 percent to 15.53 yuan after the government said it will cut transaction fees on home sales to spur apartment purchases. Sun Hung Kai Properties Ltd., Hong Kong's largest builder by market value, soared 8.5 percent to HK$68.30.

China's economy expanded at a 9 percent annual pace in the third quarter, lower than an estimate of 9.7 percent by economists in a Bloomberg survey. That was also the slowest pace of growth since an outbreak of severe acute respiratory syndrome, or SARS, in 2003.

``We expect the government to come up with policies to boost the economy, especially in the property sector,'' said Michelle Qi, a Shanghai-based portfolio manager at Bank of Communications Schroder Fund Management, which oversees about $790 million.

China Mobile Ltd. rose 7.6 percent to HK$71.10 in Hong Kong. The world's biggest phone company by users said after the close of trading profit for the nine months ended Sept. 30 increased 38 percent to 82.6 billion yuan ($12 billion), less than the 83.8 billion yuan forecast by analysts surveyed by Bloomberg.

Nissan, Daihatsu

Nissan climbed 8.9 percent to 527 yen, while minicar maker Daihatsu Motor Co. rose 6.5 percent to 961 yen after UBS lifted both companies to ``buy,'' calling the shares cheap.

Panasonic Corp., the world's largest maker of consumer electronics, gained 8.9 percent to 1,633 yen after the Nikkei newspaper said operating profit for the six months ended in September may beat the company's own estimate by more than 20 billion yen ($197 million).

Shares in the MSCI AC Asia Pacific Consumer Discretionary Index traded at 0.99 times book value, the cheapest level among the 10 industry groups in the Asian benchmark.

``Company earnings may not be as bad as we feared,'' said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. ``The recent declines in the stock market have already priced in possible negative results.''

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net

Last Updated: October 20, 2008 05:50 EDT