Japan Futures, Australian Shares Gain as France Auctions Debt

Japanese stock futures and Australian equities gained as France auctioned debt at a lower borrowing cost even after Standard & Poor’s stripped the country of its top credit rating.

American depositary receipts of Canon Inc. (7751), a Japanese camera maker that depends on Europe for almost a third of its sales, rose 2 percent from the closing share price in Tokyo. Those of Sumitomo Mitsui Financial Group Inc. (8316), Japan’s No. 2 publicly traded bank, gained 1.3 percent after it won a bid to buy Royal Bank of Scotland Group Plc’s aircraft-leasing division. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, gained 1.5 percent in Sydney after prices for crude rose.

Futures on Japan’s Nikkei 225 Stock Average expiring in March were bid in the pre-market at 8,420 in Osaka, Japan, at 8:05 a.m. local time, up from 8,380 yesterday. Australia’s S&P/ASX 200 Index rose 0.8 percent today. New Zealand’s NZX 50 Index added 0.1 percent in Wellington.

“The European Central Bank’s purchase of European debt has added to stability and supported the French auctions,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Investors had already expected the European downgrade in a way.”

The Stoxx Europe 600 Index climbed 0.8 percent to 251.12 yesterday, snapping three days of losses, as French borrowing costs fell at an auction of 51-week treasury bills in the first sale since the nation’s credit downgrade. France sold 1.895 billion euros ($2.4 billion) of one-year notes at a yield of 0.406 percent, down from 0.454 percent on Jan. 9. The Treasury sold a total of 8.59 billion euros in bills, including three and six-month paper.

Leaders Meet

Euro-area leaders will this week try to rescue efforts to deliver new fiscal rules and cut Greece’s debt burden as they urge investors to ignore the S&P downgrades.

Greek officials will reconvene with creditors on Jan. 18 after discussions stalled last week, raising the threat of default. German Chancellor Angela Merkel and French President Nicolas Sarkozy will also meet as the ECB warns governments against “watering down” a revamp of budget laws.

Standard & Poor’s 500 Index futures slid 0.1 percent today. U.S. stock markets were closed yesterday for the Martin Luther King Jr. Day holiday.

Oil yesterday climbed from the lowest price in almost four weeks as Iran said that a disruption to crude supplies through the Strait of Hormuz would cause a shock to markets that “no country” could manage. Crude for February delivery rose as much as 1.1 percent to $99.80 a barrel in New York. The contract fell to $98.70 on Jan. 13, the lowest settlement price since Dec. 21.

The London Metal Exchange Index of prices for six metals including copper and aluminum yesterday gained 0.7 percent to the highest level since October 31.

The MSCI Asia Pacific Index (MXAP) advanced 1.6 percent this year through Jan. 13, compared with a 2.5 percent gain by the S&P 500 and a 2.7 percent increase by the Stoxx Europe 600 Index. Stocks 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 10.1 times for the Stoxx 600.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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