June 16 (Bloomberg) -- Asian stocks rose, led by commodity producers such as BHP Billiton Ltd. and JFE Holdings Inc., after copper and crude oil climbed and reports showed that U.S. factory production increased.

``Commodities stocks will perform fine for the rest of the year, particularly as economic news improves in the U.S.,'' said Hans Kunnen, who helps manage $15 billion at Colonial First State Investments in Sydney. An increase in manufacturing boosts ``demand for raw materials which will, in turn, feed through to producers' earnings.''

The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 1,000 stocks, added 0.2 percent to 99.09 as of 6:15 p.m. in Tokyo, extending a two-day, 0.9 percent advance. Materials stocks as a group climbed 0.9 percent.

Australia's S&P/ASX 200 Index closed up 0.4 percent, after touching a record high. The benchmark has jumped 8 percent from its low this year on May 4. Stock indexes rose around the region, except in Hong Kong, Malaysia, Thailand and India.

Japan's Topix index advanced 0.2 percent as the government became more optimistic about the world's second-largest economy for the first time in 11 months. Mitsubishi Tokyo Financial Group Inc. led gains by lenders.

Chinese indexes had the biggest advance in the region. Power producers rose after Shanghai Electric Power Co. said it raised prices to reflect higher fuel costs.

BHP, the world's biggest miner and Australia's top oil producer, rose 1.4 percent to A$17.71. JFE, Japan's second- largest steelmaker, rose 1.7 percent to 2,710 yen.

`Sustainable'

South Korea's Posco, the world's fifth-biggest maker of the metal, advanced 1.1 percent to 184,500 won. Rinker Group Ltd., the biggest supplier of cement blocks in the U.S., climbed 2.8 percent to A$13.67 in Australia.

U.S. factory production expanded 0.4 percent in May, the Federal Reserve said, exceeding a 0.2 percent gain forecast by economists surveyed by Bloomberg News. An index of New York state manufacturing rebounded to 11.7 in June from minus 11.1 the previous month. Economists predicted a reading of 1.

Prices paid by U.S. consumers for goods and services declined 0.1 percent last month for the first time in almost a year, the Labor Department said. The Standard & Poor's 500 Index rose 0.2 percent to its highest since March 14, after the reports were released.

``The U.S. economy seems to be growing without major inflation concerns,'' said Choi Chang Hoon, who helps manage about $500 million at Woori Asset Management Co. in Seoul. ``Demand for exporters' goods in the U.S. will be sustainable.''

Copper, Crude Oil

Copper prices in New York had the biggest jump in eight sessions after a report showed industrial output in China rose more than expected last month. Crude for July delivery climbed 1 percent to $55.57 a barrel amid surging demand in China and the U.S. Prices are up 47 percent from a year ago.

Inpex Corp., Japan's biggest oil explorer, advanced 2.6 percent to 600,000 yen. PetroChina Co., the nation's biggest oil producer, gained 2.8 percent to HK$5.45.

Mitsubishi Tokyo Financial, Japan's second-largest bank, rose 1.2 percent to 936,000 yen. Sumitomo Mitsui Financial Group Inc., the third largest, climbed 1 percent to 740,000 yen. UFJ Holdings Inc., the No. 4, added 1.6 percent to 574,000 yen.

``The economy is recovering at a moderate pace, while there are some signs it is coming out of a weak situation,'' the Cabinet Office said in its monthly report released yesterday after the Japanese stock market closed.

Japanese Growth

Merrill Lynch & Co.'s brokerage unit in Tokyo recommended buying bank stocks on signs of growth in the domestic economy, Masatoshi Kikuchi, an equity strategist, wrote in a note to clients dated yesterday. Earlier this week, Nikko Citigroup Ltd. also said it turned bullish on the industry.

``The domestic story is beginning to come through,'' said Jeremy Hall, who helps manage $3.5 billion at Henderson Global Investors Ltd. in Singapore. ``Japan fundamentally looks pretty sound'' and stocks are cheap relative to earnings.

Hong Kong's Hang Seng Index fell 0.6 percent, after gains in oil prices raised concern that fuel costs at companies such as Cathay Pacific Airways Ltd. may increase.

Cathay Pacific, Asia's second-largest airline by market value, fell 0.4 percent to HK$14.10. Fuel accounts for 24 percent of the company's operating costs.

Yue Yuen Industrial (Holdings) Ltd., the world's largest maker of branded sports shoes, slid 1.1 percent to HK$23.10. The rising cost of petroleum-based products contributed to a 3.8 percent decline in the company's first-half earnings.

Thai Airways International Pcl dropped 2.8 percent to 43.50 baht. Thailand's biggest airline said it won't pay a dividend for the first half of fiscal 2005 because of higher oil costs.

China

China's Shanghai Composite Index and the Shenzhen Composite each added 1.2 percent.

Shanghai Electric Power, supplier of a third of the electricity in China's richest city, rose 0.4 percent to 4.88 yuan. The company said it will raise electricity by 1.13 yuan (14 U.S. cents) per million kilojoules starting from July 1, adding about 6 million yuan to its annual revenue.

China Yangtze Power Co., owner of the world's biggest hydropower project, gained 4.2 percent to 8.17 yuan.

BHP Billiton Ltd. (BHP AU)
Cathay Pacific Airways Ltd. (293 HK)
China Yangtze Power Co. (600900 CH)
Inpex Corp. (1604 JT)
JFE Holdings Inc. (5411 JT)
Mitsubishi Tokyo Financial Group Inc. (8306 JT)
PetroChina Co. (857 HK)
Posco (005490 KS)
Rinker Group Ltd. (RIN AU)
Shanghai Electric Power Co. (600021 CH)
Sumitomo Mitsui Financial Group Inc. (8316 JT)
Thai Airways International Pcl (THAI TB)
UFJ Holdings Inc. (8307 JT)
Yue Yuen Industrial (Holdings) Ltd. (551 HK)

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

Last Updated: June 16, 2005 05:27 EDT