Asia Stocks Rise on Expectation of Monetary Policy Easing

Asian stocks climbed, headed for the biggest five-day gain this year, on expectations central banks from the U.S., China and Europe may ease monetary policy to spur economic growth.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank, led gains among financial stocks. Renesas Electronics Corp. jumped 9.8 percent in Tokyo after a report the maker of automotive microcontrollers will announce further restructuring. Taiwan Semiconductor Manufacturing Co., the world’s No. 1 contract maker of chips, added 1.1 percent in Taipei after Micron Technology Inc. agreed to buy Japan’s bankrupt Elpida Memory Inc. in the industry’s largest tieup in four years.

The MSCI Asia Pacific Index (MXAP) advanced 0.9 percent to 118.79 as of 7:14 p.m. in Tokyo. About three stocks rose for each that fell. The Asian gauge last week posted its biggest weekly gain since January after euro-zone leaders agreed to relax conditions for recapitalizing lenders, easing concern about the debt crisis.

“There will be more monetary easing be it in Europe, from the Fed or in China,” said Robert Aspin, Singapore-based investment strategist at Standard Chartered Bank. “We are overweight global equities. Authorities in China are more worried about the quality of growth and they can do a lot more.”

Japan’s Nikkei 225 Stock Average gained 0.7 percent, while South Korea’s Kospi Index advanced 0.9 percent. Hong Kong’s Hang Seng Index climbed 1.5 percent after markets in the city reopened from a holiday yesterday. The Shanghai Composite Index added 0.1 percent.

Australia’s S&P/ASX 200 Index slid 0.1 percent after the benchmark interest rate was kept unchanged at 3.5 percent.

Speculation for further easing was spurred by a report U.S. manufacturing unexpectedly shrank in June for the first time since the economy emerged from a recession three years ago, indicating a mainstay of the expansion may be faltering.

Fed Action

The contraction may encourage more accommodative policies, Princeton University economist Alan Blinder said in an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Scarlet Fu.

“Data like this that keep coming in are encouraging or strengthening the positions of the doves on the Fed,” said Blinder, a former central bank vice chairman. “You know there’s a big civil war going on in the Federal Reserve, weakening the position of the hawks.”

Futures on the Standard & Poor’s 500 Index were little changed after swinging between gains and losses of 0.2 percent today. The gauge increased 0.3 percent in New York yesterday as takeovers helped the market recover from earlier losses triggered by the manufacturing contraction. Micron agreed to acquire Elpida, an Apple Inc. supplier. Bristol-Myers Squibb Co. said it will pay $5.3 billion for Amylin Pharmaceuticals Inc.

Europe Joblessness

Unemployment in the 17-nation euro area reached the highest level on record as a deepening economic slump and budget cuts prompted companies from Spain to Italy to reduce their workforces, a report showed yesterday. This added to speculation that central banks will add to measures unveiled by the region’s governments to contain the sovereign-debt crisis.

The European Central Bank and the Bank of England announce interest-rate decisions on July 5. ECB officials will lower their benchmark rate by 25 basis points to a record low 0.75 percent, according to the median forecast in a Bloomberg survey of 57 economists.

The China Securities Journal, a state-run newspaper, said the time is ripe for China to cut banks’ reserve requirements as slowing inflation gives more room for easing to stabilize growth.

Financial companies accounted for the largest gains on the Asian regional benchmark gauge. Mitsubishi UFJ rose 3.2 percent to 392 yen. Nomura Holdings Inc., Japan’s largest brokerage, climbed 0.7 percent to 298 yen. Agricultural Bank of China Ltd. advanced 2.9 percent to HK$3.18 in Hong Kong.

Exporters Rise

Canon Inc. (7751), a camera maker that gets nearly 60 percent of sales from the Americas and Europe, gained 1.3 percent to 3,195 yen. Li & Fung Ltd., which gets more than 80 percent of sales in the U.S. and Europe, gained 0.8 percent to HK$14.94 in Hong Kong. Yue Yuen Industrial Holdings Ltd. (551), which makes shoes for Nike Inc., rose 1 percent to HK$24.45.

The MSCI Asia Pacific Index gained 3.4 percent this year through yesterday, compared with an 8.6 percent advance by the S&P 500 and a 4.2 percent increase by the Stoxx Europe 600 Index. Stocks on the Asian benchmark are valued at 12 times estimated earnings on average, compared with 13.2 times for the S&P 500 and 10.7 times for the Stoxx 600.

Technology companies advanced after Micron agreed to acquire Elpida. Taiwan Semiconductor gained 1.1 percent to NT$84.20 in Taipei. Wintek Corp., a designer of liquid crystal displays, climbed 1.2 percent to NT$16.55.

Renesas rallied 9.8 percent to 348 yen after Kyodo News reported the company will announce restructuring plans today. After market close the chipmaker said it will cut more than 5,000 jobs or 12 percent of its workforce.

Kawasaki Kisen Kaisha Ltd. (9107) slumped 15 percent to 134 yen in Tokyo after the marine cargo and passenger transporter cut its full-year profit forecast and said it will sell shares to raise funds.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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