Oct. 12 (Bloomberg) -- Asian stocks rose, led by Mitsubishi UFJ Financial Group Inc. and Mitsui Fudosan Co., after an industry report showed Japan's equity funds attracted a record amount of money.

``Everyone wants to buy Japan because of the economic recovery story and companies that benefit from domestic demand are the obvious choice,'' said Koji Uchida, who helps look after $17 billion at UFJ Partners Asset Management Co. in Tokyo. He favors financial companies and real estate developers.

The Morgan Stanley Capital International Asia Pacific Index, which tracks more than 1,000 stocks, added 0.5 percent to 111.64 at 12:15 p.m. in Tokyo, extending a two-day, 1.3 percent climb. Mitsubishi UFJ and Mitsui Fudosan made up a 10th of the gain.

Japan's Topix index gained 1.1 percent, the region's biggest gain, while the Nikkei 225 Stock Average added 0.4 percent. Benchmarks advanced around the region except in South Korea, Taiwan, Singapore, the Philippines, Indonesia and China.

Commodity producers including BHP Billiton rose after copper and oil prices climbed. Computer-related stocks fell after LG.Philips LCD Co. predicted flat-panel prices will drop in the fourth quarter and Morgan Stanley cut its recommendation on Samsung Electronics Co.

The U.S. Standard & Poor's 500 Index dropped 0.2 percent yesterday to its lowest since May 17 amid concern higher oil prices will slow economic growth.

Mitsubishi UFJ, the world's largest bank by assets, gained 1.4 percent to 1.47 million yen. Mizuho Financial Group Inc., Japan's second-biggest lender, rose 2.5 percent to 739,000 yen.

Record Inflows

Mitsui Fudosan, Japan's biggest property developer by sales, jumped 6.4 percent to 1,797 yen. Mitsubishi Estate Co., the biggest by market value, rose 4.6 percent to 1,612 yen.

Japanese stock funds attracted $1.54 billion in the week ended Oct. 5, Emerging Portfolio Fund Research said in a statement today. The total was the most since Emerging Portfolio, which tracks 5,189 stock funds with $1.4 trillion in assets, started following Japanese funds in 2001.

Signs that the country's economic recovery will persist, after suffering four recessions in the past 15 years, have fueled demand for Japanese stocks.

A government report released yesterday showed machinery orders jumped 8.2 percent in August, exceeding all 26 estimates in a Bloomberg News survey of economists. Japan's economy expanded in the second quarter at a 3.3 percent annual pace, triple an initial government estimate.

Copper, Crude Oil

An MSCI Asia-Pacific index of raw-material shares added 0.6 percent, while a measure of energy shares gained 1.1 percent.

Copper futures in London yesterday climbed 1.4 percent to $3,970 a metric ton, the third straight increase. Crude oil in New York jumped 2.8 percent, the biggest advance since Sept. 19, to $63.53 a barrel. Oil was at $63.66 in after-hours trading.

BHP Billiton, the world's largest miner, climbed 2.3 percent to A$20.80. The company also gets about a fifth of its earnings from oil. Inpex Corp., Japan's biggest oil producer, gained 2.7 percent to 832,000 yen.

Rio Tinto Ltd., the world's third-largest miner, added 0.9 percent to A$57.52. Cnooc Ltd., China's third-largest oil company, rose 2 percent to HK$5.20 in Hong Kong.

``I'm still bullish on resources shares because the fundamentals that will drive commodities demand and prices have not really changed,'' said Eric Betts, a Sydney-based strategist at Nomura Australia Ltd. ``There's more value there now.''

LG.Philips, the world's largest maker of liquid crystal displays, slumped 6.7 percent to 41,950 won. The company said after the market closed yesterday that third-quarter profit slid 22 percent. Flat panel inventory increased, the company said.

`Shattered' Hope

Brokerages including Woori Investment & Securities Co. cut their share price estimates on the company, citing slower profit growth on falling prices. Woori Investment downgraded the stock to ``hold'' from ``buy.''

``The inventory problem in the flat-panel industry has turned from bad to worse,'' said Tom Fu, a fund manager at PCA Securities Investment Trust Co. in Taipei, which manages $2.3 billion in assets. ``The latest comments by LG.Philips shattered any remaining hope investors had.''

Samsung Electronics, South Korea's largest electronics maker and exporter, lost 1.5 percent to 590,000 won. Keon Han, a Morgan Stanley analyst, cut a recommendation on the stock to ``equal weight'' from ``overweight,'' according to the brokerage's daily note.

``We discount what we see as a likely business cycle slowdown for Samsung'' in the first half of 2006, Han wrote.

Taiwan Semiconductor Manufacturing Co., the world's largest supplier of made-to-order chips, dropped 2.1 percent to NT$51.80. Chartered Semiconductor Manufacturing Ltd., Singapore's biggest chipmaker, slid 3.8 percent to S$1.02.

To contact the reporter on this story: Darren Boey in Hong Kong at dboey@bloomberg.net; Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: October 11, 2005 23:17 EDT