Asia Stocks Climb on Lower Borrowing Costs, Economic Reports

Jan. 27 (Bloomberg) -- Asian stocks rallied from a seven- week low, led by banks and mining companies, as borrowing costs declined and U.S. and Australian data eased concern of a deepening global recession.

Commonwealth Bank of Australia added 2.7 percent in Sydney as a government stimulus package helped a gauge of the country’s business confidence to rebound. Toyota Motor Corp., which gets more than a third of its sales in North America, jumped 5.6 percent after a U.S. index of leading indicators rose unexpectedly. BHP Billiton Ltd., the world’s biggest mining company, rallied 6.1 percent after metal prices jumped.

“There is optimism in the market the global economy will recover from the latter half of this fiscal year,” said Mamoru Shimode, Tokyo-based chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “That optimism may help the stock market push through the current downturn.”

The MSCI Asia Pacific Index rose 2.7 percent to 82.24 at 12:36 p.m. in Tokyo, with 17 stocks advancing for each one that declined. The gauge is down 8.2 percent this year, extending 2008’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.

Hitachi Chemical Co. was the MSCI measure’s worst performer after the company reduced its full-year forecast. Honda Motor Co. climbed 6 percent after the Nikkei newspaper reported the company will ramp up production in China.

The Nikkei 225 Stock Average rose 4.1 percent to 7,998.28, the biggest gain since Dec. 15. Australia’s S&P/ASX 200 Index rose 2.7 percent. Markets in Hong Kong, China, Taiwan, Korea, Singapore, Malaysia and Vietnam are closed today for holidays.

Financial Turmoil

Futures on the U.S. Standard & Poor’s 500 Index gained 1 percent today. The gauge drifted yesterday between gains and losses before finishing up 0.6 percent.

An index of financial shares on the MSCI Asia Pacific climbed 2.8 percent today. The measure is the worst performing of 10 industry groups this year as losses from the credit crisis swelled to more than $1 trillion. Declines have cut the average valuation of companies on the MSCI Asia Pacific by two-fifths in the past year to about 10 times reported profit.

Commonwealth Bank, Australia’s biggest mortgage lender, rose 2.7 percent to A$24.73 as the rate the country’s banks charge for three-month loans fell the most since Jan. 16.

Separately, a National Australia Bank Ltd. survey of more than 400 companies showed that business confidence rose in December from a record low as a government stimulus package and interest-rate cuts buoyed consumer spending.

Economic Stimulus

Macquarie Group Ltd., Australia’s largest investment bank, added 3 percent to A$25.28. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, gained 3.5 percent to 474 yen.

Asian financial stocks also rallied after the UK’s Barclays Plc said it won’t need government funding because revenue increased last year and American Express Co.’s profit beat the most pessimistic forecasts.

The turmoil in financial markets dragged the U.S., Japan and European economies into their first simultaneous recessions since World War II, prompting spending packages and interest- rate cuts worldwide to stimulate global growth.

Bank of Japan policy board members will focus on lowering longer-term borrowing costs for companies after cutting the overnight rate to 0.l percent in December, meeting minutes released today show.

Toyota, the world’s largest automaker, jumped 5.6 percent to 2,910 yen. The U.S. Conference Board leading indicators index, which points to the direction of the economy in the next three to six months, rose 0.3 percent versus the 0.2 percent drop estimated by economists in a Bloomberg survey. Sales of existing homes in the U.S. climbed 6.5 percent last month, whereas economists had expected a decline.

Commodity Prices

Honda, Japan’s second-largest carmaker, climbed 6 percent to 2,060 yen. The company plans to increase production capacity in China by 20 percent in anticipation of greater demand for fuel-efficient cars, the Nikkei newspaper reported.

BHP Billiton rose 6.1 percent to A$29.11 in Sydney. The U.S. data boosted commodities prices, driving up a gauge of six metals by 5.5 percent in London yesterday. Copper in New York surged 7.8 percent.

Hitachi Chemical tumbled 9.5 percent to 878 yen. The company expects to break even for the year ending March 31, amid lower demand from makers of chips and cars. It had earlier forecast a profit for the year.