Asian Stocks Rise Third Day on U.S. Economic Optimism

Asian stocks rose for a third day, with the regional gauge poised for the highest close in almost six months, after an increase in U.S. home purchases boosted confidence in the world’s largest economy.

Honda Motor Co. (7731), a Japanese carmaker that gets 83 percent of sales abroad, climbed 1.8 percent in Tokyo. Mitsubishi UFJ Financial Group Inc. increased 1.6 percent as Japanese banks advanced. Naver Corp. sank 4 percent in Seoul after two of its competitors, Kakao Corp. and Daum Communications Corp., said they will merge. Dainippon Sumitomo Pharma Co. plunged by a record as it suspended a study on an experimental cancer drug.

The MSCI Asia Pacific Index (MXAP) added 0.4 percent to 141.54 as of 4:03 p.m. in Hong Kong, headed for its highest close since Dec. 3. All but one of its 10 industry groups rose. Purchases of new American homes climbed in April for the first time in three months as buyers took advantage of falling mortgage rates, driving U.S. stocks to a record high last week. U.S. and U.K. equity markets are closed for holidays.

“A range of indicators suggest growth is bouncing back this quarter,” said Shane Oliver, who oversees about $133 billion as Sydney-based head of investment strategy at AMP Capital Investors Ltd. “The broad trend in shares is expected to remain up. Share-market fundamentals remain favorable with reasonable valuations, global earnings are improving on the back of rising economic growth and monetary conditions are set to remain easy for some time.”

Regional Gauges

Japan’s Topix (TPX) index climbed 1.2 percent. The yen held three days of losses, trading at 101.92 per dollar and boosting exporters. Honda advanced 1.8 percent to 3,565 yen and Nissan Motor Co. rose 1 percent to 920 yen.

South Korea’s Kospi index slipped 0.3 percent as Naver declined 4 percent to 745,000 won. New Zealand’s NZX 50 Index closed little changed and Australia’s S&P/ASX 200 Index added 0.4 percent.

Hong Kong’s Hang Seng Index was little changed and the Hang Seng China Enterprises Index of mainland shares listed in the city added 0.1 percent. The Shanghai Composite Index rose 0.3 percent. Singapore’s Straits Times Index advanced 0.1 percent and Taiwan’s Taiex index added 0.3 percent. India’s S&P BSE Sensex jumped 1.5 percent, poised for a record close.

A Commerce Department report showed U.S. home sales increased 6.4 percent last month, the most since October. Declining borrowing costs and greater employment opportunities raise the prospects for an industry that has struggled to build on gains made earlier last year.

Manufacturing Boost

The Asia-Pacific gauge advanced the past two weeks as U.S. and Chinese manufacturing beat estimates and a weaker yen boosted Japanese equities. That left the measure trading at 12.9 times estimated earnings on May 23 compared with 16.1 for the S&P 500 and 15.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

S&P 500 futures added 0.3 percent today. The measure gained 1.2 percent last week to a record 1,900.53, with the gauge trading in the tightest range in eight years, according to data from Bespoke Investment Group LLC. In the last three months, the difference between the S&P 500’s intraday high and low has been less than 5 percent.

Dainippon Sumitomo Pharma (4506) plunged 21 percent to 1,158 yen after stopping the study on an experimental drug for colorectal cancer when an independent safety monitoring committee said the drug failed to meet the criteria set for managing the disease. Its biggest shareholder Sumitomo Chemical Co. dropped 5.2 percent to 365 yen.

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

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond

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