Asian Stocks Edge Higher on Signs U.S. Weathering Europe Crisis

December 30, 2011, 12:37 AM EST By Yoshiaki Nohara and Norie Kuboyama

Dec. 30 (Bloomberg) -- Asian stocks edged higher on the last trading day of 2011, with the region’s benchmark index set for its first yearly drop since 2008, as rising U.S. home sales signaled the world’s largest economy is weathering Europe’s debt crisis.

Sony Corp., Japan’s biggest exporter of consumer electronics, gained 1.6 percent. Techtronic Industries Company Ltd., a maker of industrial products that gets about 73 percent of its revenue in North America, added 1.5 percent in Hong Kong. Cnooc Ltd., China’s largest offshore energy explorer, rose 0.9 percent after oil gained. Chiyoda Corp. gained 2.7 percent after a report operating profit may top the Japanese engineering company’s forecast.

The MSCI Asia Pacific Index added 0.2 percent to 113.02 as of 11:23 a.m. in Tokyo. The measure has lost 0.5 percent this month and is set for an 18 percent drop this year. For the week, the gauge is down 0.6 percent.

“Investors increasingly feel the U.S. economy is firmer than they had expected,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “The economic data is looking good and that will boost stock markets, especially when concern about Europe’s debt issues aren’t in the forefront.”

The Asia Pacific gauge has lost about $1.78 trillion this year amid concern Europe’s three-year debt crisis will drag the global economy into recession. Stocks on Asia’s benchmark are valued at 12.6 times estimated earnings on average, compared with 12.6 times for Standard & Poor’s 500 Index and 10.5 times for the Stoxx Europe 600 Index.

Fukushima Dai-Ichi

Utilities have fallen 27 percent this year, dropping the most among the 10 industry groups on the Asian gauge. Japanese power producers tumbled amid a nuclear crisis at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant. The utility has lost 91 percent this year, the biggest drop on the MSCI All Country World Index.

Japan’s Nikkei 225 Stock Average gained 0.3 percent today. Trading volume was about half the 100-day average ahead of a four-day weekend. Hong Kong’s Hang Seng Index rose 0.4 percent. Australia’s S&P/ASX 200 lost 0.3 percent. South Korea’s market is closed today for a holiday.

Futures on the S&P 500 Index slid 0.1 percent The gauge advanced 1.1 percent yesterday in New York after a report showed a jump in pending sales of existing homes that exceeded economist estimates by almost five times.

Sony, James Hardie

Exporters to the U.S rose. Sony added 1.6 percent to 1,376 yen in Tokyo, Techtronic Industries rose 1.5 percent to HK$8.04.

Gains in stocks may be limited after Italy yesterday fell short of its target in a debt auction. Prime Minister Mario Monti said his government won’t “rule out” more aggressive efforts to reduce debt.

“Markets will continue to be unstable for the first quarter of next year,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which oversees the equivalent of $24 billion. “European nations will need to unite as they debate how to rehabilitate the region’s finances. The leadership will be tested.”

Cnooc rose 0.9 percent to HK$13.70. Crude oil for February delivery gained as much 0.2 percent on the New York Mercantile Exchange amid potential supply disruptions by Iran around the Strait of Hormuz and on optimism about the U.S. economy.

--Editors: Jason Clenfield, Jim Powell.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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