March 19 (Bloomberg) -- Asian stocks rebounded from the biggest drop in eight months and metals recovered as concern receded on Europe’s debt crisis. The yen resumed its slide, while South Korea’s won snapped an eight-day losing streak.
The MSCI Asia Pacific Index rose 0.5 percent as of 2:31 p.m. in Tokyo. Futures on the Standard & Poor’s 500 Index added 0.1 percent. Copper, aluminum and zinc gained at least 0.2 percent after dropping by more than 1 percent yesterday. The yen weakened 0.4 percent to 95.56 per dollar, halting a three-day advance. The won strengthened 0.4 percent.
Stocks are rebounding, after more than $500 billion of market value was erased yesterday, on optimism a plan to tax Cyprus’s bank accounts to fund a bailout won’t be replicated elsewhere. Bank of Japan Governor Masaaki Shirakawa steps down today, making way for Haruhiko Kuroda, who has pledged to do whatever it takes to end deflation. The U.S. Federal Reserve starts a two-day policy meeting today.
“Investors are not overly concerned about the potential for political contagion,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “Investors and bank depositors appear to accept assurances that this is a one-off measure that would not be imposed on citizens of larger debtor nations elsewhere in Europe.”
Former European Central Bank Executive Board member Lorenzo Bini Smaghi said the type of bailout proposed for Cyprus, which will be voted on by the island’s lawmakers today, only makes sense there because bank balance sheets are so large compared to gross domestic product. “There’s no reason for doing that in other countries,” he said today in an interview with Bloomberg Television’s Susan Li.
About two shares rose for each that fell on the MSCI Asia Pacific Index, which yesterday tumbled 1.9 percent from a 20-month high. The gauge traded at 14.6 times average estimated earnings yesterday compared with 14 for the Standard & Poor’s 500 Index and a multiple of 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg
Japan’s Nikkei 225 Stock Average rose 2 percent, after dropping 2.7 percent yesterday. The gauge is trading within 1 percent of a four-year high reached last week. South Korea’s Kospi Index climbed 0.6 percent, while Hong Kong’s Hang Seng Index added 0.3 percent.
Mitsubishi UFJ Financial Group Inc. rallied 1 percent after Japan’s largest publicly traded lender yesterday fell by the most in eight months. Esprit Holdings Ltd., a Hong Kong-based clothier that counts Europe as its No. 1 market, gained 2.6 percent.
Copper, aluminum and zinc rebounded from the lowest levels in about four months. Copper for delivery in three months gained 0.2 percent to $7,593 a metric ton on the London Metal Exchange. Aluminum climbed 0.5 percent to $1,945 a ton, and zinc rose 0.6 percent to $1,930 per ton.
Gold held at $1,605.95 an ounce, its highest level in more than two weeks, before the Federal Reserve starts its policy meeting amid bets board members will decide to keep buying bonds to support growth. The metal has fallen 4.2 percent this year as some Fed officials called for stimulus to be reined in.
The won snapped its longest run of losses in almost five years as investors judged recent declines excessive. The dollar’s 14-day relative strength index against South Korea’s currency closed above 70 in the last two days, a threshold that signals the greenback may weaken.
The yen declined versus all its 16 major peers before a change of leadership at the BOJ takes effect tomorrow. It is this year’s worst performer in a basket of currencies tracked by Bloomberg Correlation-Weighted Indices and has slumped 17 percent versus the greenback in the past six months.
Outgoing BOJ Governor Masaaki Shirakawa said receding risk aversion is making the yen weaker. Analysts at JPMorgan Chase & Co. and Barclays Plc predict the bank will add stimulus as soon as the next policy meeting on April 3-4.
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