Oct. 11 (Bloomberg) -- Asian stocks advanced, led by Mitsubishi UFJ Financial Group Inc., after the Nihon Keizai newspaper said Japan's lenders will have repaid half the funds they received in government bailouts ahead of schedule.

``I'm bullish on bank shares for the long term because the turnaround scenario is very firm,'' said Masaki Iso, who oversees $6.1 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo. ``The banking business in Japan is becoming better and better.''

The Morgan Stanley Capital International Asia-Pacific Index, tracking more than 1,000 companies, added 0.5 percent to 110.21 as of 12:05 p.m. in Tokyo. A measure of bank stocks including Mitsubishi UFJ climbed 1.3 percent, the biggest gain among the benchmark's 10 industry groups.

Japan's Topix index rose 0.9 percent, while the Nikkei 225 Stock Average added 0.7 percent. Key indexes also advanced in South Korea, China, Malaysia, Thailand and the Philippines. They fell elsewhere.

Chartered Semiconductor Manufacturing Ltd. led declines by semiconductor-relater shares after Xilinx Inc., a computer-chip maker in the U.S., reported disappointing sales.

Australia's S&P/ASX 200 Index dropped 0.8 percent, the region's biggest loser. Pacifica Group Ltd., a maker of brake parts for companies including General Motors Corp., fell after Goldman Sachs JBWere Pty cut its rating to ``underperform'' from ``market perform.''

GM Fallout

Doubts about GM's future helped push the Standard & Poor's 500 Index to a five-month low yesterday. The odds of a bankruptcy filing by GM tripled after Delphi Corp., the largest U.S. auto- parts maker, filed for Chapter 11 protection, according to a Banc of America Securities analyst.

Hong Kong's stock exchange is closed today for a holiday. Markets were closed yesterday in Japan and Taiwan.

Mitsubishi UFJ, the world's largest bank by assets, jumped 4.5 percent to 1.4 million yen. Mizuho Financial Group Inc., Japan's second-largest bank, gained 4.3 percent to 708,000 yen.

Sumitomo Mitsui Financial Group Inc., Japan's third-largest lender, climbed 3.2 percent to 1.02 million yen.

Mitsubishi UFJ, which earlier intended to repay all public funds by the fall of 2007, is planning to accelerate its payment schedule by more than a year, according to a Nihon Keizai report on Oct. 9. Sumitomo Mitsui also intends to move up plans to repay state funds it received, the newspaper said.

Banks have received about 12.4 trillion yen ($108.6 billion) in funds from earlier government bailouts, the report said.

Goldman Upgrade

David Atkinson, bank analyst at Goldman, Sachs & Co.'s unit in Tokyo, raised his recommendation on the banking industry to ``attractive'' from ``neutral'' in the brokerage's Japan morning summary today.

``Positive surprises are still possible in areas such as banking,'' wrote Robert McKillop, head of Japanese equities at Edinburgh, Scotland-based Standard Life Investments, which manages about $225 billion globally. ``Major banks have largely eliminated their non performing loan problem.''

McKillop made the comments in a report on the firm's fourth- quarter global outlook.

Nintendo Co., the world's biggest maker of hand-held video games, dropped 3.4 percent to 12,890 yen. First-half sales unexpectedly fell because it sold fewer GameCube home consoles and less game software in North America.

A measure of technology shares had the biggest slide on the regional index. Chartered, Singapore's biggest chipmaker, fell 4.5 percent to S$1.06. Taiwan Semiconductor Manufacturing Co., the world's largest supplier of made-to-order chips, dropped 1.9 percent to NT$52.90.

`Further Declines'

Xilinx, the world's biggest maker of programmable semiconductors, said revenue in the quarter ended Sept. 30 was down as much as 2 percent from the preceding quarter and below its earlier forecast. Xilinx said sales to companies with Asian manufacturing operations fell by more than 10 percent.

Pacifica Group slumped 11 percent to A$1.66. Andrew Gibson, an analyst at Goldman Sachs JBWere in Melbourne, said the brokerage regards ``any investment in Pacifica as high risk.''

A measure of U.S. auto-related companies, including GM, slumped 5.7 percent yesterday in New York. Banc of America analyst Ronald Tadross downgraded shares of GM to ``sell'' from ``neutral'' and said the company's bankruptcy odds are now 30 percent, up from 10 percent. GM's debt rating, already below investment grade, was cut one level by S&P.

``We're likely to see further declines in U.S.-related stocks here in Asia because a 12-month slowdown in the U.S. economy is on the cards, and I'm not sure markets here have yet taken full account of it,'' said Tom Murphy, who manages about $500 million at Deutsche Bank in Sydney.

To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net; Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: October 10, 2005 23:08 EDT