Jan. 31 (Bloomberg) -- Asian stocks rose for the first day in three. Canon Inc., the world's second-largest seller of digital cameras, led gains by technology companies after it forecast record full-year profit.

``Investors are looking for companies that can deliver consistent earnings growth,'' said Taiji Yoshida, who helps manage the equivalent of $7.6 billion at Yasuda Asset Management Co. in Tokyo. ``It's a difficult investment environment.''

Regional exporters such as AU Optronics Corp. and airlines including Cathay Pacific Airways Ltd. advanced as crude oil futures fell after Iraq's first free election in 50 years passed without disruption to oil supplies.

The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 900 companies in the region, climbed 0.5 percent to 100.11 as of 3:37 p.m. in Tokyo. All 10 industry groups that make up the regional benchmark rose with the Information Technology Index the best performer.

The Nikkei 225 Stock Average added 0.6 percent to 11,387.59, while the broader Topix index gained 0.5 percent.

Taiwan's Taiex index advanced 1.9 percent, making it the region's best performer, on optimism of growing links between the island and China after the resumption of Lunar New Year flights.

China's stock benchmarks fell, with the Shanghai Composite index set for a six-year low. All other key indexes advanced except for those in New Zealand, Malaysia and Indonesia.

Rewarding the Winners

Canon jumped 2.5 percent to 5400 yen, its biggest gain since Oct. 4. The company said fourth-quarter profit rose 7.8 percent and it forecast a sixth straight year of record profit in 2005.

``Investors will reward companies that exceed expectations,'' Yutaka Miura, a manager at Shinko Securities Co. in Tokyo, said.

Honda Motor Co., which predicted a fourth straight year of record earnings, advanced 2.1 percent to 5,430 yen. Japan's third- largest carmaker reversed a forecast of a decline amid cost reductions and increased production in China. Third-quarter net income reported on Jan. 28 beat some analysts' estimates.

Crude oil for March delivery fell 1.6 percent to $46.41 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The March contract on Jan. 28 slid 3.4 percent to $47.18 a barrel, its biggest decline in a month.

U.S. stock-index futures rose, sending the Nasdaq 100 Globex Futures Index up 0.8 percent, after as many as 8 million Iraqis defied deadly attacks and threats of violence by insurgents to take part in Iraq's first democratic election since 1953.

`Restoring Confidence'

``The fact that the Iraq election went smoothly is restoring confidence among investors that the `big event' risk is out of the way,'' said Hiroaki Kuramochi, managing director and head of equity sales at Bear Stearns (Japan) Ltd. in Tokyo. ``That seems to be prompting some buying in U.S. futures.''

Asian exporters rose on optimism lower fuel costs will help boost demand from the U.S., the world's biggest consumer of oil.

AU Optronics, the world's third-largest maker of flat-panel displays used in computers and televisions, jumped 5.9 percent to NT$48.30. Samsung Electronics Co., South Korea's biggest exporter advanced 1.2 percent to 495,000 won.

Chartered Semiconductor Manufacturing Ltd., the world's fourth-largest supplier of made-to-order chips, jumped 5.9 percent to 99.5 Singapore cents. The company gets two-thirds of its sales from the U.S.

Airlines Gain

In Hong Kong, Cathay Pacific, Asia's sixth-largest carrier, gained 1.1 percent to HK$14.05. All Nippon Airways Co., Japan's second-largest carrier, advanced 1 percent to 390 yen.

Jet fuel prices, which have risen as much as 70 percent last year, boosted costs at All Nippon and other airlines around the world. The price of jet fuel, which rose to a 14-year record of $63.95 a barrel on Oct. 14, fell to $54 a barrel in Singapore on Jan. 28, according to Platts pricing service.

Taiwan's Taiex had its biggest advance in 11 weeks. Some investors bet the resumption of charter flights between China and Taiwan will ease political tension.

A China Southern Airlines Co. Boeing 777-200 jetliner carrying Taiwanese home for the Lunar New Year landed in Taipei on Jan. 29, the first mainland commercial carrier to alight in Taiwan since 1949. China is the island's biggest export market.

``The flights mark an important milestone in cross-Strait relations,'' said Phil Chen, who helps manage the equivalent of $1.9 billion in assets at Grand Cathay Securities Investment Trust Co. in Taipei. ``They ease worries of political risks when investing in Taiwan stocks.''

China

The Shanghai Composite Index, which tracks yuan-denominated A shares and foreign-currency B shares, dropped 1.5 percent, set for its lowest close since May 21, 1999. The Shenzhen Composite Index, which tracks the smaller of the two Chinese markets, fell 1.9 percent.

Hong Yuan Securities Co. slumped by its 10 percent daily limit to 3.80 yuan, leading a decline in brokerage stocks after the company forecast a net loss for 2004. CITIC Securities Co., the brokerage unit of the biggest investment company, fell 5.7 percent to 4.98 yuan.

``Brokerage earnings are closely related to stock market movements,'' said Liang Jing, an analyst with Guotai Junan Securities Co. in Shanghai. ``With the markets slumping, 2004 proved to be the most difficult year for securities companies.''

Indian stocks rose after the government said it would allow non-state pension funds to invest as much as 5 percent of their holdings in equities. Reliance Industries Ltd. and State Bank of India led gains.

``Pension funds are long-term players, that should add depth to the markets,'' said Sanjay Sinha, who manages about $500 million at UTI Asset Management Co. in Mumbai.

Reliance, the nation's biggest non-state run company rose 1.2 percent to 529.05 rupees. State Bank, the nation's largest lender, added 2.7 percent to 639.8 rupees.

To contact the reporters for this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net

Last Updated: January 31, 2005 01:38 EST