Asia Stocks, Won Gain on Growth Outlook; Treasuries Drop on Inflation Risk

Asian stocks gained, with the region’s benchmark index set for its best week since December, and the won strengthened amid signs of sustained global growth. Treasuries declined as traders increased bets inflation will accelerate as the U.S. economy expands.

The MSCI Asia Pacific Index added 0.5 percent to 139.85 as of 11:40 a.m. in Tokyo, bound for a 2.8 percent weekly advance. Standard & Poor’s 500 Index futures were little changed after the gauge reached a 32-month high yesterday. The won rallied 0.4 percent versus the dollar. Ten-year Treasury yields rose three basis points to 3.61 percent. Copper snapped a three-day drop.

Taiwan’s economy expanded at a faster-than-forecast pace last quarter, fueling concerns that the island’s central bank will need to raise borrowing costs. Vietnam lifted interest rates yesterday for the first time since November and the U.S. consumer-price index gained. Group of 20 policy makers, at odds over smoothing over global economic imbalances, will have to tackle a spread of inflation from emerging markets to advanced economies as they meet in Paris from today.

“The global economy is recovering,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “Stocks gains are consistent on the U.S. economy but also beyond the U.S. as well.”

More than two shares gained for each that declined on MSCI’s Asian index, which was on course for its best week since Dec. 3. Billabong International Ltd. was the gauge’s best performer, jumping 7.8 percent after the Australian surf-wear maker boosted first-half revenue and forecast full-year sales that exceeded analyst estimates.

Emerging Markets

The MSCI Emerging Markets Index added 0.6 percent, taking its gains for the week to 2.5 percent. The measure was also poised for its best performance since the five days ended Dec. 3. Taiwan’s Taiex rose 1.6 percent today and South Korea’s Kospi index rallied 1.2 percent.

The won traded at 1,113.88 per dollar, the highest level in more than a week. Taiwan’s dollar strengthened 0.4 percent to NT$29.32 against its U.S. counterpart after the island’s statistics bureau said yesterday after the market closed that gross domestic product climbed 6.92 percent in the three months through December.

Malaysia’s economy grew 4.6 percent last quarter, following a 5.3 percent expansion in the previous three months, according to the median forecast of 14 economists surveyed by Bloomberg News before today’s report. Thailand’s economy probably grew 4.1 percent during the quarter, according to a separate survey before the figures are released on Feb. 21.

‘Bullish’ on Growth

The dollar was at $1.3612 per euro from $1.3609 in New York yesterday, after earlier weakening to $1.3627, the lowest level since Feb. 10. It was set for a 0.4 percent loss this week. The yen fetched 113.46 per euro from 113.37 yesterday, when it fell to 113.68, the least since Jan. 28. The Japanese currency has declined 0.3 percent this week.

“Investors are feeling more bullish on the economic outlook,” said Kazuhiro Takahashi, a general manager at Tokyo- based Daiwa Securities Capital Markets Co.

An index of sentiment among factory executives in France rose to 109 in February from 108 the previous month, while industrial orders in Italy increased 2.1 percent in December from November, when they fell 4.3 percent, according to Bloomberg surveys of economists. U.K. retail sales climbed 0.5 percent in January from December, when they sank 0.8 percent, a separate survey showed. All three reports are due today.

U.S. Inflation

U.S. data yesterday showed the Conference Board’s index of leading indicators rose for a seventh straight month, while a Federal Reserve gauge of Philadelphia-area manufacturing topped economists’ estimates. Figures from the Labor Department showed the consumer-price index increased 0.4 percent, exceeding the 0.3 percent median estimate of economists.

The difference between yields on two-year U.S. notes and Treasury Inflation Protected Securities, which tracks the outlook for consumer prices over the life of the securities, expanded to 1.97 percentage points, the widest since July 2008.

Commodities climbed, with copper rising 0.9 percent to $9,895 a metric ton on the London Metal Exchange. Zinc and lead gained at least 1 percent. Crude oil for March delivery fluctuated after surging 1.6 percent on the New York Mercantile Exchange yesterday amid mounting tensions in the Middle East.

Bahrain’s army fired teargas shells, buckshot and rubber bullets yesterday in the capital, Manama, to quell an uprising by pro-democracy protesters. Credit-default swaps on Bahrain jumped for a fourth day, rising 18.5 basis points to 286, the highest since July 2009, according to CMA.

The past week has also seen anti-government protests and clashes in Libya, Africa’s biggest holder of crude oil reserves, and Yemen, a producer of liquefied natural gas.

To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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