Asian Stocks Rise as U.S. Inflation Damps Rate Concerns

Asian stocks rose for a third day, with the regional benchmark index extending a six-year high, as U.S. inflation data damped concerns interest-rate increases will be brought forward. Chinese shares in Hong Kong jumped.

Lotte Confectionery Co. surged 8.1 percent to a record close after the chocolate maker’s parent moved to unwind cross shareholdings within the group. A gauge of mainland stocks traded in Hong Kong advanced 2 percent to erase this year’s loss. Tokyo Electron Ltd. slid 2.9 percent after a report said its merger with Applied Materials Inc. was opposed by China.

The MSCI Asia Pacific Index gained 0.5 percent to 148.56 as of 9:24 p.m. in Hong Kong, with eight of its 10 industry groups rising, after closing yesterday at the highest level since June 2008. The cost of living in the U.S. rose at a slower pace in June and home sales climbed to an eight-month high, showing the world’s biggest economy is generating little price pressure as growth accelerates.

“I don’t think the Federal Reserve is in a hurry to raise interest rates anytime soon given the low inflation data,” Toby Lawson, head of futures, options and cash equities trading for Asia-Pacific at Newedge Group SA in Sydney, said by phone. “The market was spooked last week by a potential escalation of the conflict in Ukraine, but such concern probably has eased off a little bit.”

Ukraine Tensions

The European Union weighed limiting Russia’s access to capital markets as a train carrying bodies from flight MH17 arrived in Kharkiv, Ukraine. The U.S. has indicated it believes Russia supplied the missile that downed the Malaysian jetliner last week, killing all 298 on board, though Russian Ambassador to Malaysia Lyudmila Vorobyeva told reporters in Kuala Lumpur that it played no role and that Ukrainian separatists don’t have the required long-range anti-aircraft weapons.

Australia’s S&P/ASX 200 Index advanced 0.6 percent. The nation’s core consumer prices gained more than economists forecast last quarter, affirming policy makers’ decision to adopt a neutral interest-rate stance. New Zealand’s NZX 50 Index gained 0.3 percent.

The Jakarta Composite Index gained 0.2 percent. Joko Widodo, who won Indonesia’s presidential vote after a divisive race that led his opponent to plan a court challenge, said he’s aiming for economic expansion that hasn’t been seen in the world’s fourth-most-populous nation since before the 1990s Asian financial crisis.

Japan, China

The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong jumped 2 percent, erasing this year’s loss on speculation the government is accelerating measures to support the housing market. The Hang Seng Index (HSI) climbed 0.8 percent, while Singapore’s Straits Times Index advanced 0.7 percent. China’s Shanghai Composite Index added 0.1 percent and Japan’s Topix index fell 0.1 percent. South Korea’s Kospi index closed little changed. Taiwan is closed due to a typhoon. India’s S&P BSE Sensex Index climbed 0.5 percent.

The MSCI Asia Pacific Index traded at 13.6 times estimated earnings today compared with 16.6 for the Standard & Poor’s 500 Index yesterday, according to data compiled by Bloomberg.

Futures on the S&P 500 climbed 0.2 percent today. The U.S. equity benchmark index rose 0.5 percent yesterday.

The U.S. consumer price index increased 0.3 percent in June after a 0.4 percent gain in May, figures from the Labor Department showed yesterday in Washington. Purchases of existing houses advanced 2.6 percent to a 5.04 million annual rate, the National Association of Realtors reported.

Miners Rally

Raw-material producers and energy companies led the advance among the 10 industry groups on the MSCI Asia Pacific Index. (MXAP)

BHP Billiton Ltd. gained 1.2 percent to A$38.98 in Sydney after the world’s biggest mining company said iron-ore output increased 19 percent in the three months ended June, beating analyst expectations. Rival Rio Tinto Group, which boosted ore output 11 percent in the period, added 0.6 percent to A$64.53.

Lotte Confectionery surged 8.1 percent to a record close of 2.136 million won in Seoul, the biggest advance on the MSCI Asia Pacific Index. A move by parent Lotte Group to unwind crossholdings is positive as it adds transparency to the business, Korea Investment & Securities Co. wrote in a note today.

Apple suppliers advanced after the world’s biggest smartphone maker by market value reported quarterly profit rose 12 percent to $7.75 billion, with a jump in iPhone and Mac sales helping make up for a drop in iPad demand.

AAC Technologies Holdings Inc., which makes audio components for Apple gadgets, gained 1.1 percent to HK$48.60 in Hong Kong. Sharp Corp., a supplier of liquid crystal display screens for iPhone and iPad, rose 1.2 percent to 327 yen in Tokyo.

Gome Electrical Appliances Holding Ltd. jumped 6.9 percent to HK$1.39 in Hong Kong after saying six-month net-income may more than double.

Among shares that fell, Tokyo Electron dropped 2.9 percent, the most since April, to 6,935 yen. A proposed merger with Applied Materials received strong opposition from China’s Ministry of Industry & Information Technology, dealReporter said yesterday, citing two people familiar with the matter.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Jim Powell

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