Asian Stocks Advance After U.S. Reports Lift Earnings Outlook

December 26, 2011, 3:17 AM EST By Yoshiaki Nohara

Dec. 26 (Bloomberg) -- Asian stocks rose, extending last week’s gain, as orders for U.S. durable goods and home sales climbed, boosting confidence in the world’s biggest economy and the earnings outlook for Asia’s exporters.

Fanuc Corp., a maker of factory robots that gets 75 percent of its sales outside Japan, rose 2.9 percent in Tokyo. CSR Corp., a trainmaker, dropped 7.3 percent in Shanghai after a report China’s railway ministry will cut construction spending. Mitsubishi Corp., Japan’s biggest commodities trader by revenue, rose 1.7 percent after prices of raw materials and metals increased. Woongjin Energy Co. slipped 7 percent in Seoul after clients canceled orders for solar-energy equipment.

“America is holding up amid concern Europe’s problems would drag the world down,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion. “The U.S. economy will need policy backing to stand its ground. Moves in equities will be limited this week before investors start seeking a trend in the next year.”

The MSCI Asia Pacific Index gained 0.2 percent to 113.90 as of 4:20 p.m. in Tokyo, with eight out of the 10 industry groups advancing. The measure added 1.1 percent last week. The gauge has tumbled 17 percent this year amid concern Europe’s debt crisis will slow global economic growth.

Japan’s Nikkei 225 Stock Average rose 1 percent today after a public holiday on Dec. 23. Trading volume on the gauge was 51 percent below the 100-day average, according to data compiled by Bloomberg.

South Korea’s Kospi Index fell 0.6 percent, while China’s Shanghai Composite Index slipped 0.7 percent. Markets in Hong Kong, Australia and Singapore are shut today for holidays.

U.S. Data

The Standard & Poor’s 500 Index added 0.9 percent in New York on Dec. 23. as orders for durable goods rose in November by the most in four months and sales of new U.S. homes advanced last month to a seven-month high.

Stocks also gained after the U.S. Congress passed a two- month extension of a payroll tax cut. President Barack Obama signed the measure, and negotiators are making plans to start work on a longer-term deal.

‘Worst Avoided’

“There was a consensus that 2012 U.S. growth would fall,” said Naoki Murakami, chief economist at Monex Group Inc. in Tokyo. “The worst-case scenario has been avoided, and that’s a positive for stocks.”

Exporters to the U.S. advanced. Fanuc added 2.9 percent to 11,780 yen. Honda Motor Co., Japan’s second-largest carmaker by market value, rose 1.3 percent to 2,354 yen.

Stocks in the MSCI Asia Pacific Index were valued at 12.7 times estimated earnings on average as of Dec. 23, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx Europe 600 index, according to data compiled by Bloomberg.

Utilities posted the biggest decline among the 10 industry groups in the Asia-Pacific gauge this year as Japanese power generators tumbled after meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

Tepco, as the utility is known, lost 4.1 percent to 213 yen today after the Nikkei newspaper reported the company may seek several hundred billion yen in fresh aid to compensate nuclear disaster victims. Tepco received 890 billion yen ($11.4 billion) in state assistance last month.

Railway Stocks

CSR dropped 7.3 percent to 4.42 yuan after Xinhua News Agency said China’s railway ministry will reduce construction spending to 400 billion yuan ($63 billion) in 2012 from 469 billion yuan this year. China Railway Construction Corp. lost 1 percent to 3.99 yuan.

Mitsubishi Corp. climbed 1.7 percent to 1,539 yen after the Thomson Reuters/Jefferies CRB Index of raw materials added 0.1 percent on Dec. 23 and a gauge of prices for industrial metals advanced in London. Itochu Corp., a Japanese trading firm, rose 1.1 percent to 769 yen.

Woongjin Energy slipped 7 percent to 4,500 won after three clients canceled orders for solar-cell wafers because of the global economic slowdown and lower demand for alternative energy, according to regulatory filings.

--With assistance from Norie Kuboyama and Toshiro Hasegawa in Tokyo. Editors: Jim Powell, Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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