Asian Stocks Edge Higher Amid Easing Debt Crisis Concern

Asian stocks advanced a second day, with the regional benchmark index posting its biggest monthly gain, as optimism Spain’s progress on deficit goals will help Europe contain its debt crisis outweighed signs of slowing global economic growth.

Hutchinson Whampoa Ltd. (13), a Hong Kong-based operator ports in Europe, gained 1.3 percent as Spain proposed a fifth austerity budget that may allow it to meet deficit targets agreed to with the euro zone. Korea Aerospace Industries Ltd. (047810) surged 15 percent after Hyundai Heavy Industries Co. made a bid for an $890 million stake in the planemaker. Machinery-maker SMC Corp. (6273) slid 1.2 percent in Tokyo after Japan’s industrial production fell more than estimated.

The MSCI Asia Pacific Index (MXAP) gained 0.1 percent to 122.69 as of 6:08 p.m. in Tokyo, paring the week’s decline to 0.6 percent. The gauge climbed 4.2 percent this month as central banks in Europe, the U.S. and Japan took action to boost economic growth.

“Spain’s position on austerity cuts is positive because it may prevent the country from falling into a vicious cycle,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “There’s concern whether the central government will be able to push these cuts because local governments are powerful in Spain.”

Asia’s equity benchmark advanced 7.8 percent this year compared with a 15 percent gain on the Standard & Poor’s 500 Index and an 11 percent advance on the Stoxx Europe 600 Index. The Asian benchmark traded at 12.8 times estimated earnings compared with 14 for the S&P 500 and 12 for the Stoxx 600.

Nikkei 225

Japan’s Nikkei 225 Stock Average (NKY) slid 0.9 percent today. Industrial production in the world’s third-largest economy fell more than economists estimated in August as slowing demand in China and Europe undermines the recovery. SMC shares retreated 1.2 percent to 12,580 yen.

South Korea’s Kospi added 0.4 percent. Shares rose even after the country’s factory production slid 0.7 percent, dropping for a third month as a strike at Hyundai Motor Co. weighed on output.

Hong Kong’s Hang Seng Index added 0.4 percent amid continued speculation China will announce measures to stimulate the economy or boost equities. The gauge advanced the most in a week yesterday as a report showed Chinese industrial companies’ profits dropped a fifth month, adding pressure on Premier Wen Jiabao to step up measures to support the world’s second-largest economy.

Deficit Target

Futures on the S&P 500 slid less than 0.1 percent today. The gauge advanced 1 percent yesterday, halting a five-day slump, as U.S. stocks joined a global rally amid speculation that China’s government will do more to boost growth. The optimism outweighed U.S. data signaling a slowdown in business spending and weaker-than-estimated second-quarter economic growth.

Exporters to Europe gained, with Makita Corp., a Japanese powertool maker that gets more than 40 percent of sales in the debt-stricken region, climbing 0.8 percent to 3,030 yen. Hutchinson Whampoa rose 1.3 percent to HK$75.20.

Spanish Prime Minister Mariano Rajoy’s nine-month-old government announced its fifth austerity package in what may be a move to head off tougher conditions demanded as part of a potential European bailout. His Cabinet approved a new tax on lottery winnings and a cut in ministries’ spending as part of a 13 billion-euro ($16.8 billion) central government package to shrink the euro area’s third-biggest budget deficit.

Korea Aerospace soared 15 percent to 27,900 won. Shipbuilder Hyundai Heavy offered to buy a 42 percent stake that’s being sold by investors led by Korea Finance Corp. The stake is worth $890 million, based on yesterday’s closing price.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@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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