Asian Stocks, Aussie Rise on Australian GDP; Oil Advances - Businessweek Asian Stocks, Aussie Rise on Australian GDP; Oil Advances - Businessweek

Wednesday, June 6, 2012

Asian Stocks, Aussie Rise on Australian GDP; Oil Advances - Businessweek

Asian Stocks, Aussie Rise on Australian GDP; Oil Advances - Businessweek

European stock futures and Asian shares (MXAP) gained after Australia’s economy grew at twice the rate economists estimated and as investors awaited a European Central Bank meeting today. The so-called Aussie rallied, while aluminum rose as metals in London resumed trading after a holiday.

Euro Stoxx 50 Index futures added 1 percent at 7:14 a.m. in London, while those for the Standard & Poor’s 500 Index advanced 0.5 percent. The MSCI Asia Pacific Index climbed 1.2 percent. The Nikkei 225 Stock Average jumped 1.8 percent. The Australian dollar strengthened 0.9 percent against the U.S. currency, while the euro rose 0.3 percent to $1.2489. Aluminum increased 0.7 percent and oil advanced 0.6 percent in New York.

Australia’s gross domestic product expanded 1.3 percent the last quarter from the previous three months, a Bureau of Statistics report showed, compared with the median 0.6 percent gain predicted by economists in a Bloomberg News survey. While ECB officials meeting in Frankfurt will leave the benchmark rate at 1 percent today, according to 32 of 44 economists surveyed by Bloomberg News. Of the remainder 11 respondents predict a quarter-point reduction and one forecasts a half-point cut.

“Expectations for growth have been tempered to such a degree that economic data points are going to surprise to the upside,” said Stephen Corry, Hong Kong-based chief investment strategist at LGT Group, which oversees $12 billion of Asian assets. “There’s potential for more policy stimulus and markets are clearly oversold.”

Interest Rates

The Group of Seven nations yesterday agreed to coordinate their response to Europe’s turmoil, which has tipped at least eight of the 17 euro-area economies into recession. European representatives “said they will speed up their efforts to resolve those problems, which was encouraging to us,” Japanese Finance Minister Jun Azumi told reporters in Tokyo.

Germany’s Die Welt newspaper said Spain may receive a precautionary credit line from the European Financial Stability Facility. The newspaper’s report was a preview of a story that will run today and cites unidentified people familiar with talks about the possible option.

The MSCI Asia Pacific Index is heading for the biggest two- day advance since January, following yesterday’s 1.1 percent rise. The measure trades at 11.2 times its companies’ estimated earnings, the lowest valuation since October 2008, weekly data compiled by Bloomberg show. The gauge plunged 15 percent from a six-month high in February through June 4 as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.

ECB Meeting

“There’s been an excess of risk-off sentiment in stocks and commodities and so we’re having a little rebound,” said Toshio Sumitani, a strategist at Tokai Tokyo Financial Holdings Inc.,a Tokyo-based securities firm. “Tonight the ECB has a policy meeting and investors are hoping they’ll offer something to the markets. The economy, whether it’s in Japan or the U.S., hasn’t gotten bad enough to justify where we are.”

Stocks in Asia also advanced after U.S. service industries sustained their pace of growth in May, showing the biggest part of the U.S. economy is withstanding the impact of the European debt crisis.

The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the world’s largest economy, increased to 53.7, topping the median projection of economists for a reading of 53.4.

Asian currencies rose the most in five weeks. Malaysia’s ringgit climbed 0.7 percent to 3.178 per dollar, the Thai baht strengthened 0.3 percent to 31.49 and the Philippine peso added 0.5 percent to 43.3. The Bloomberg-JPMorgan Asia Dollar Index strengthened 0.2 percent, the most since April 30. The gauge lost 2.8 percent in May in its worst drop since September.

German Banks

Moody’s Investors Service downgraded seven German lenders and three in Austria in today, prompted by Europe’s debt crisis. Commerzbank AG, Germany’s second-largest bank, was reduced to A3 from A2, Moody’s said in a statement. A review of bigger Deutsche Bank will be concluded later, Moody’s said.

In Hong Kong, Country Garden Holdings Co. paced gains by Chinese developers after Deutsche Bank AG said the nation’s home sales in May probably reached the highest value since last June. China should cut interest rates at an “appropriate time” to avoid a deep growth slump, the state-run China Securities Journal said in a front-page commentary today.

Oil for July delivery rose to $84.78 a barrel, a third day of gains. Inventories fell 1.8 million barrels last week, the industry-funded American Petroleum Institute said after yesterday’s close. Three-month delivery aluminum climbed to $1,985 a metric ton on the London Metal Exchange. The LME reopened after two days of holidays.

The cost of insuring Asia-Pacific corporate and sovereign bonds from default decreased, according to traders of credit- default swaps. The Markit iTraxx Asia index of 40 investment- grade borrowers outside of Japan declined three basis points to 202, on course for the lowest close since May 31, according to Credit Agricole and CMA prices.

To contact the reporters on this story: Richard Frost in Hong Kong at; Adam Haigh in Sydney at

To contact the editor responsible for this story: Nick Gentle at

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