Asian Stocks Climb as U.S. Housing Permits Boost Outlook

Asian stocks rose, with the region’s benchmark index set for a third weekly gain, after U.S. housing permits rose to a four-year high, helping temper concerns about the strength of a global recovery.

Santos Ltd. (STO) climbed 3.2 percent after the Australian energy explorer said it will begin sales from a shale gas project in October. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded lender, rose 2.2 percent as German Chancellor Angela Merkel backed the European Central Bank’s conditions for assisting indebted countries. Samsung Electronics Co. (005930), an electronics exporter, fell 3.7 percent in Seoul after resting its case in a patent-infringement trial with Apple Inc.

The MSCI Asia Pacific Index (MXAP) rose 0.3 percent to 120.82 as of 7:43 p.m. in Tokyo. Almost five stocks climbed for every three that declined on the gauge, which is poised for its longest run of weekly gains since early March. The measure closed at 120.93 on Aug. 9, the highest since May 8.

“Markets are moving to a more risk-on phase,” said Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The U.S. recovery seems more robust than people had thought previously. Investors in Asia are still waiting for earnings to justify valuations.”

Through yesterday, the Asia-Pacific gauge fell 6.6 percent from this year’s high on Feb. 29 on concern Europe’s debt crisis and slower growth in China and the U.S. are hurting earnings.

Relative Value

The regional benchmark index traded at 12.5 times estimated earnings compared with 13.7 for the Standard & Poor’s 500 Index (SPXL1) and 11.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. Of 437 companies on the measure that reported quarterly earnings since May 16, and for which Bloomberg has estimates, 54 percent have missed projections.

Japan’s Nikkei 225 Stock Average increased 0.8 percent, extending yesterday’s 1.9 percent jump. Australia’s S&P/ASX 200 Index (AS51) added 0.9 percent. South Korea’s Kospi Index slipped 0.6 percent, dragged lower by Samsung.

Hong Kong’s Hang Seng Index advanced 0.8 percent and the Shanghai Composite Index rose 0.1 percent. Singapore’s Straits Times was little changed.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. Stocks in the U.S rose yesterday as Cisco Systems Inc. reported profit that beat estimates and as the housing-permits report offset a bigger-than-forecast drop in Philadelphia-area manufacturing.

Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., rose 0.7 percent to HK$23.10, while Honda Motor Co., a carmaker that counts North America as its biggest market, climbed 2.4 percent to 2,642 yen, a fifth straight gain.

Oil Climbs

Santos increased 3.2 percent to A$11.78 afters saying it expects its first sales of shale gas in October following the drilling of a well in the Cooper Basin of central Australia. The company, which also reported a 48 percent drop in first-half profit today, is among explorers seeking to tap what the Australian government estimates is almost 400 trillion cubic feet of domestic shale gas resources.

Oil traded higher than $95 a barrel today after increasing 1.4 percent in New York yesterday. Cnooc Ltd. (883), China’s largest offshore producer, climbed 2 percent to HK$15.58 in Hong Kong. S-Oil Corp., a South Korean refiner, added 2.3 percent to 110,500 won.

Chancellor Merkel backed the European Central Bank’s insistence on conditions for helping reduce borrowing costs in indebted countries, saying Germany is “in line” with the ECB’s approach to defending the euro. Euro-area policy makers “feel committed to do everything we can to maintain the common currency,” Merkel said yesterday in Ottawa at a joint press conference with Canadian Prime Minister Stephen Harper.

Mitsubishi, Samsung

Mitsubishi UFJ climbed 2.2 percent to 370 yen in Tokyo. Esprit Holdings Ltd., a clothier that counts Europe as its largest market, advanced 1.8 percent to HK$11.50 in Hong Kong.

Samsung, which advanced more than 20 percent in the month through yesterday, dropped 3.7 percent to 1.295 million won. The company, the world’s No. 1 shipper of smartphones, finished presenting its arguments in a patent-infringement case in California against rival and customer Apple.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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