Asian Stocks Rise as U.S. Optimism Overshadows European Concern

Asian stocks advanced for a third day, with the regional benchmark index heading for its highest close in a week, as optimism about the U.S. economy tempered concern Europe’s debt crisis is worsening.

James Hardie Industries SE (JHX), a maker of building materials that gets most of its sales in the U.S., climbed 3 percent in Sydney. AU Optronics Corp. (2409), which supplies liquid-crystal displays to Nokia Oyj and Dell Inc., gained 4.4 percent in Taipei. China Unicom (Hong Kong) Ltd. fell 3.5 percent amid concern competition will increase among mainland telecoms.

“There are more positive signs particularly on employment” and consumer spending in the U.S., saidStephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The outlook in the U.S. is for modest growth this year, and that’s better than Europe. Expectations are Europe will be in a recession.”

The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 116.35 as of 8:01 p.m. in Tokyo, having swung between gains and losses at least eight times. About three shares rose for every two that fell on the measure. The gauge advanced 0.9 percent last week as manufacturing growth from China to the U.S. bolstered confidence in the global economy.

Australia’s S&P/ASX 200 Index increased 0.9 percent, while Japan’s Nikkei 225 Stock Average rose 0.3 percent. Hong Kong’s Hang Seng Index added 0.8 percent. South Korea’s Kospi Index lost 0.4 percent.

China Inflation

China’s Shanghai Composite Index (SHCOMP) decreased 0.4 percent, snapping a three-day rally, on concern inflation will hamper the government’s ability to ease lending curbs. A report due tomorrow will probably show consumer prices rose 4 percent in December, according to analysts’ estimates.

Futures on the Standard & Poor’s 500 Index were little changed today, erasing losses of as much as 0.3 percent. The gauge rose 0.9 percent in New York yesterday as global equities rallied amid bets that China will ease monetary policy to spur growth in the world’s second-largest economy.

Exporters advanced as U.S. employers hired 4.15 million workers in November, 107,000 more than in the prior month, the Labor Department said yesterday. A survey by Chief Executive magazine showed confidence among American CEOs rose last month to the highest level since May.

James Hardie rose 3 percent to A$7.12 in Sydney. AU Optronics climbed 4.4 percent to NT$14.30 in Taipei. LG Display Co. (034220), the world’s second-largest LCD maker by sales, gained 2.7 percent to 26,800 won in Seoul.

Europe Risk

“The strong outlook and underpinnings of the U.S. economy are much more important to the Asian market outlook than European uncertainty,” said Sandy Mehta, Hong Kong-based chief executive officer of Value Investment Principals Ltd. “We think the Europe situation remains difficult and presents risk, but much of this is already discounted by investors and the situation will be more stable by mid-year.”

Germany’s economic growth slowed last year to 3 percent as the sovereign debt crisis damped export demand and Spanish industrial production shrank by the most since Oct. 2009, reports showed today. Spain will auction as much as 5 billion euros ($6.4 billion) of bonds tomorrow, while Italy is scheduled to sell 12 billion euros of bills. Germany will auction 4 billion euros of five-year notes today.

Raw material producers advanced after the London Metals Exchange Index (LMEX), which tracks prices of six primary metals including aluminum and copper, rose for a third day yesterday. Aluminum prices may rise more than 6 percent by the end of the quarter as processing companies replenish inventory to meet demand, said Vedanta Resources Plc, India’s biggest producer.

Indian Retailers

BHP Billiton Ltd. (BHP), the world’s biggest mining company, increased 1.5 percent to A$36.18 in Sydney. Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal, climbed 2.3 percent to HK$3.61. Hindalco Industries Ltd., India’second-largest aluminum producer, jumped 5 percent to 129.35 rupees.

Indian retailers rallied after the government removed a limit on foreign investment in single-brand store chains, paving the way for international players such as Starbucks Corp. and Ikea to operate in the country without a local partner.

Pantaloon Retail India Ltd. (PF), India’s largest retailer, climbed 6.2 percent to 155.9 rupees. Clothier Provogue India Ltd. (PROV) jumped 10 percent to 27.05 rupees.

Apple’s iPhones

Chinese phone companies declined today amid concern increasing competition will hurt profit as China Telecom Corp., the nation’s third-largest carrier, moves closer to getting government approval to offer Apple Inc.’s iPhone.

China Unicom, the mainland’s only iPhone distributor, sank 3.5 percent to HK$15.86. China Telecom lost 1.4 percent to HK$4.22.

The MSCI Asia Pacific Index lost 17 percent in 2011 as China took steps to cool its property market and Europe struggled to resolve its debt crisis. The S&P 500 Index broke even for the year and the Stoxx Europe 600 Index dropped 11 percent. Stocks in the Asian gauge were valued at 12.2 times estimated earnings on average as of yesterday, compared with 12.3 times for the S&P 500 and 10 times for the Stoxx 600.

Tokyo Electric Power Co., the utility at the center of the Fukushima Dai-Ichi nuclear disaster, declined 6.1 percent to 202 yen. Tepco, as the company is known, is in talks with banks to borrow as much as 2 trillion yen ($26 billion) to help stave off bankruptcy.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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