Asian Stocks Gain on Bank of Japan Speculation; Ringgit Rises

March 12 (Bloomberg) -- Asian stocks gained and the yen weakened amid speculation Japan’s central bank will add more funds to its financial system. Emerging-market currencies strengthened as rising confidence in Greece’s ability to pay its debt shored up demand for riskier assets.

The MSCI Asia Pacific Index rose 0.3 percent to 123.24 as of 5:19 p.m. in Tokyo, paced by the Nikkei 225 Stock Average’s 0.8 percent advance. The yen weakened against all 16 major counterparts. Malaysia’s ringgit increased 0.5 percent to the strongest in 19 months. Futures on the U.S. Standard & Poor’s 500 were little changed. The Stoxx Europe 600 gained 0.2 percent to 258.17.

The Bank of Japan may seek to expand a 10 trillion-yen ($110 billion) fund that provides loans to banks in a March 16- 17 policy meeting, according to two central bank officials who spoke on condition of anonymity. Finance Minister Naoto Kan said in parliament today foreign-exchange intervention is an option. Emerging-market and high-yield bond funds each took in more than $1 billion in the week to March 10, EPFR Global said yesterday.

“I would think highly of any additional easing by the BOJ to preempt the yen’s appreciation,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion in Tokyo. “The economy is improving, so investors aren’t bearish.”

Japan’s Topix advanced 0.6 percent. Hong Kong’s Hang Seng Index lost 0.1 percent. The Philippine Stock Exchange Index sank 1.7 percent after the central bank pared a lending program for banks yesterday and said it will consider doing more to reduce cash in the economy.

Nissan, Honda

Shares of automakers in Japan gained on speculation government policies will weaken the yen, boosting the value of overseas income converted into the country’s currency.

Nissan Motor Co., which gets 57 percent of its revenue in North America and Europe, climbed 2.4 percent to 764 yen. Honda Motor Co. advanced 0.9 percent to 3,300 yen.

The yen traded at 90.63 per dollar from 90.51 in New York yesterday. It fell to 90.82 on March 10, the lowest level since Feb. 23. It dropped to 124.11 per euro in Tokyo from 123.82 in New York yesterday, the weakest since Feb. 23. Finance Minister Kan told the Diet he’s “aware” that currency intervention is an option if markets move too abruptly.

“Expectations remain strong especially among foreign investors that the BOJ will do more easing,” said Daisaku Ueno, president in Tokyo at Gaitame.Com Research Institute Ltd., a unit of Japan’s largest currency margin company. “Some foreign investors seem to be using the expectations in order to make yen-sell positions.”

Asian Drugmakers

Health-care companies rose the most among the MSCI Asia Pacific Index’s 10 industry groups on speculation proposed changes to the U.S. health system will be harder to pass.

Takeda Pharmaceutical Co., Asia’s biggest drugmaker, increased 1.5 percent to 4,135 in Tokyo, the second-biggest boost to the MSCI index. North America accounts for 34 percent of the company’s sales.

Speculation over the passage of the health-care system changes helped the S&P 500 Index rise 0.4 percent yesterday.

Emerging-market currencies gained as improved confidence in Greece’s ability to pay its debt shored up demand for riskier assets. Emerging-market and high-yield bond funds each took in more than $1 billion in the week to March 10, EPFR Global said yesterday, the strongest net inflows since the company started publishing weekly data on the sectors a decade ago.

Malaysia’s ringgit advanced 0.4 percent to 3.307 per dollar, reaching the strongest level in 19 months. The Taiwan dollar strengthened 0.2 percent to NT$31.77 per dollar.

Emerging Markets

Overseas investors bought $711 million more Korean shares than they sold in the last four days, taking net purchases for the month to $1.4 billion. The risk premium investors demand to buy Greece’s debt over comparable German bonds has narrowed from an 11-year high on Jan. 28.

“It’s a global story with the improvement in European sovereigns translating into stronger demand for emerging-market assets,” said Sebastien Barbe, head of emerging-markets research at Credit Agricole CIB in Hong Kong.

The yield on the 10-year German bund touched 3.2 percent yesterday, the highest level since Feb. 23, after reaching 3.11 percent two days ago, a signal investors are seeking riskier assets as Greece tackles its debt woes. Greece has a budget shortfall that, at 12.7 percent of gross domestic product, was the European Union’s largest in 2009.

Credit-Default Swaps

The cost of protecting corporate bonds from default fell in Australia and Japan today. The Markit iTraxx Japan index fell 1.5 basis points to 120.5 basis points, according to Morgan Stanley prices. That’s the lowest since Jan. 12. The Markit iTraxx Australia index fell 1 basis point to 81 basis points, according to Australia & New Zealand Banking Group Ltd.

Crude oil traded above $82 a barrel in New York after the Organization of Petroleum Exporting Countries said it’s set to increase shipments at the end of the month on strong demand from China, the world’s second-biggest energy user.

Oil for April delivery gained 0.1 percent to $82.16 a barrel in electronic trading on the New York Mercantile Exchange at 9:52 a.m. Sydney time. Yesterday, the contract rose 2 cents to $82.11. Futures have risen 0.9 percent this week, after last week’s 2.3 percent increase.

Copper for three-month delivery dropped 0.3 percent to $7,443 a metric ton. Chile’s state-owned company Codelco, the world’s biggest producer, said output was normal after a series of tremors shook central Chile yesterday.

To contact the reporter for this story: Darren Boey at dboey@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.