Asian Stocks Rise Most in Three Months on Fed, China PMI

Asian stocks rose, with the regional benchmark index set for the biggest gain in three months, after minutes showed Federal Reserve policy makers see a muted risk of inflation from continued U.S. stimulus and a Chinese manufacturing gauge topped estimates.

Alumina Ltd. climbed 7.1 percent in Sydney to pace an advance among materials companies, which led gains on the regional benchmark index. China Gas Holdings Ltd. jumped 6 percent in Hong Kong after Russia reached a $400 billion supply accord with China. Sanrio Co. slumped the most since 1995 in Tokyo on earnings concern after yesterday’s strategy briefing from the maker of Hello Kitty toys.

The MSCI Asia Pacific Index advanced 1.2 percent to 140.39 as of 4:31 p.m. in Hong Kong, poised for the biggest jump since Feb. 21. Four stocks rose for each that declined. The measure fell 1.3 percent over the past four days amid concern about China’s growth outlook. Shares extended gains today after a preliminary gauge of mainland manufacturing in May rose to five-month high, suggesting the economy is stabilizing as the government moves to counter a slowdown.

“We’re certainly not back on what you’d call a brilliant footing with the economy, but we are seeing a change for the better,” Evan Lucas, a Melbourne-based market strategist at IG Markets Ltd., said by phone. “It’s a positive sign.”

Hong Kong’s Hang Seng Index gained 0.5 percent, while the Hang Seng China Enterprises Index of mainland Chinese equities listed in the city jumped 1.1 percent. The Shanghai Composite Index slipped 0.2 percent.

Japan’s Topix index surged 1.7 percent. South Korea’s Kospi index and New Zealand’s NZX 50 Index both rose 0.4 percent. Taiwan’s Taiex index jumped 1.2 percent, while Singapore’s Straits Times Index was little changed.

China PMI

Australia’s S&P/ASX 200 Index advanced 1 percent, the most since February. James Hardie Industries Plc rose 5.7 percent to A$14.47 in Sydney after the maker of building materials said it will buy back shares and increase spending on projects.

The China manufacturing Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April and beating economists’ estimates. Readings below 50 indicate contraction. China is the world’s biggest exporter and the No. 1 consumer of industrial metals.

China Gas rose 6 percent to HK$13.08 and China Resources Gas Group Ltd. climbed 3.9 percent to HK$25.40 in Hong Kong. Russia signed a $400 billion deal to supply natural gas to China after more than a decade of negotiations.

Gas Deal

The accord between the world’s largest energy exporter and the biggest consumer will allow state-run gas producer Gazprom to invest $55 billion developing fields in eastern Siberia and building a new pipeline, Russian President Vladimir Putin said.

Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The U.S. equities benchmark climbed 0.8 percent yesterday. Fed officials are monitoring progress toward full employment in the U.S. as they consider the timing of the first interest-rate increase since 2006. The minutes also showed policy makers agreed that “early communication” of their exit strategy on stimulus and interest rates “would enhance the clarity and credibility of monetary policy.”

The central bank said last month the U.S. economy is showing signs of picking up and the job market is improving. It pared its monthly asset-buying to $45 billion, the fourth straight $10 billion cut, and said further reductions in measured steps are likely. The Fed reiterated in the minutes that it will keep the key interest rate target near zero for a “considerable time” once it concludes the bond program.

Relative Value

The Asia-Pacific gauge traded at 12.7 times estimated earnings yesterday compared with 16 for the S&P 500 and 15.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Material firms advanced. Alumina surged 7.1 percent to A$1.425, and Rio Tinto Group climbed 2.6 percent to A$60.96 in Sydney. Gold producer Zijin Mining Group Co. added 1.7 percent to HK$1.77 in Hong Kong.

Sanrio tumbled 16 percent to 2,598 yen in Tokyo. Goldman Sachs Group Inc. cut price targets for the maker and licenser of Hello Kitty toys and apparel citing a waning outlook for U.S. sales.

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