Asia Stocks Set for Biggest Weekly Gain in Year as EU Borrowing Costs Fall

Asian stocks rose, with a regional benchmark index poised for its longest streak of weekly advances in a year, as lower Italian and Spanish borrowing costs added to optimism Europe’s debt crisis may be contained.

Canon Inc. (7751), a camera maker that gets a third of its sales in Europe, climbed 3.1 percent in Tokyo. JGC Corp. (1963), Japan’s biggest builder of factories by sales, jumped 3.9 percent after winning a $15 billion project to build a liquefied natural gas facility in Australia. Suzlon Energy Ltd., a maker of wind turbines, climbed 9.9 percent in Mumbai after its unit was contracted to develop a power plant in the U.S.

Once concern about Europe’s debt crisis is “lifted at least in the short-term, we should see some good performance in Asian equity markets,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. ECB policy makers “have stabilized the whole situation. There’s a lot of bonds to be issued by European governments in the short-term. It is important for them to be able to refinance.”

The MSCI Asia Pacific Index gained 0.9 percent to 117.23 as of 7:05 p.m. in Tokyo, poised for its highest close since Dec. 8. Almost two shares rose for each that fell. The gauge is heading for its fourth weekly advance, the longest streak since last January, amid bets Europe will manage its debt and China will ease lending curbs in the world’s second-biggest economy.

Japan’s Nikkei 225 Stock Average advanced 1.4 percent, while South Korea’s Kospi Index gained 0.6 percent. Australia’s S&P/ASX 200 Index added 0.4 percent. Hong Kong’s Hang Seng Index rose 0.6 percent. China’s Shanghai Composite Index declined 1.3 percent.

Taiwan Elections

Taiwan’s Taiex was little changed ahead of tomorrow’s presidential elections. President Ma Ying-jeou, who heads the Kuomintang Party, has been widening his lead over the Democratic Progressive Party’s Tsai Ing-wen in opinion polls.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The measure added 0.2 percent in New York yesterday after ECB President Mario Draghi pointed to signs of economic stabilization after the central bank provided three-year loans to lenders totaling a record 489 billion euros ($628 billion) last month to maintain liquidity.

Exporters to Europe advanced after Spanish two-year yields fell to the lowest since March as the nation raised 9.98 billion euros ($12.8 billion) from a note auction, twice the target. Italy’s two-year yields fell to the lowest since September.

‘Reasonably Successful’

Canon gained 3.1 percent to 3,355 yen in Tokyo. Mazda Motor Corp., a Japanese carmaker that gets 18 percent of sales from Europe, rose 1.6 percent to 130 yen. Esprit Holdings Ltd. (330), the Hong Kong-based clothier that counts Europe as its biggest market, climbed 4.1 percent to HK$11.68.

“The ECB’s long-term refinancing operations looks reasonably successful with regard to the Spanish and Italian bond auctions,” Lim Say Boon, chief investment officer at DBS Private Bank, said on Bloomberg Television. “That’s keeping the appetite for risk up for the time being.”

JGC and Chiyoda Corp. (6366) rallied after their group was awarded a $15 billion contract to help build Inpex Corp. (1605)’s Ichthys LNG project. JGC climbed 3.9 percent to 1,975 yen, while Chiyoda advanced 3.1 percent to 824 yen.

Inpex, Japan’s biggest energy explorer, and partner Total SA of France are going forward with the $34 billion project to help meet demand from Asian power producers. Inpex gained 1.2 percent to 516,000 yen.

Indian Stocks

The BSE India Sensitive Index climbed 0.7 percent. Suzlon Energy advanced 9.9 percent to 22.70 rupees after German subsidiary Repower Systems SE announced a contract to develop a 150-megawatt power project in Oklahoma.

Coal India Ltd., the country’s top producer of the fuel, rose 5 percent to 342 rupees after saying it’s close to reaching a wage agreement with unions.

Pacific Metals Co. (5541) climbed 4.5 percent to 375 yen in Tokyo after Goldman Sachs Group Inc. said the stainless-steel supplier and Bridgestone Corp. will be among the top Japanese stocks this year, Bridgestone, the world’s biggest tire maker by sales, rose 1.4 percent to 1,733 yen.

The MSCI Asia Pacific Index advanced 2 percent this year through yesterday, compared with the S&P 500’s 3 percent rise and a 2 percent climb for the Stoxx Europe 600 Index. Shares in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10 times for the Stoxx 600.

Among stocks that declined, Belle International Holdings Ltd., China’s biggest shoe retailer, slumped 6.9 percent to HK$11.86 in Hong Kong, the sharpest fall in the MSCI Asia Pacific Index. (MXAP) The company said same-store sales rose 8.2 percent in the three-months ended December compared with a 18.5 percent surge in the previous quarter.

China Taiping Insurance Holdings Co. sank 6.1 percent to HK$13.28 after saying it expects “substantially” lower full- year profit because of damage claims from Thailand’s floods.

To contact the reporters on this story: Jonathan Burgos 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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