Asian Stocks Rise as Stimulus Hopes Offset Europe Concern

Asian stocks gained, with the regional benchmark index heading for its biggest weekly advance since February, as optimism the Federal Reserve will act to stimulate economic growth tempered concerns that Europe’s debt crisis will worsen.
Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., rose 0.9 percent in Hong Kong even as U.S. jobless claims rose unexpectedly. Esprit Holdings Ltd. gained 7.6 percent, heading for its first advance in three days, after the clothier said it will continue with its transformation strategy after both its chairman and chief executive officer quit. Samsung Electronics Co., the world’s biggest mobile-phone maker that gets about 19 percent of sales from Europe, dropped 3.2 percent in Seoul.

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Investors trade and monitor stocks at a securities exchange house in Shanghai. Photographer: Qilai Shen/Bloomberg

The MSCI Asia Pacific Index added 0.6 percent to 113.66 as of 11:33 a.m. in Tokyo, with more than two shares rising for each that fell. The measure is heading for a 2 percent advance this week, the most since January. The gauge dropped 12 percent from this year’s peak on Feb. 29 through yesterday amid concern growth in the U.S. and China is slowing and as Europe’s debt crisis intensified.
“We’re likely to see increasing talk from governments about how they can encourage the growth agenda,” said Angus Gluskie, who helps manages more than $350 million at White Funds Management in Sydney. “That will benefit the markets as we move towards the second half of the year. There’s plenty of uncertainty out there. We may still see investors continue to be nervous about Spain and Italy in the aftermath of Greece’s election.”

Volumes Down

Trading volumes across the region were below the 30-day average ahead of the June 17 Greece election, data compiled by Bloomberg showed.
Japan’s Nikkei 225 Stock Average (NKY) added 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.4 percent. Hong Kong’s Hang Seng Index advanced 1.2 percent, while China’s Shanghai Composite Index rose 0.2 percent. South Korea’s Kospi Index fell 0.7 percent.
Exporters to the U.S. gained on heightened speculation the Federal Reserve will act to stimulate growth as more Americans applied for jobless benefits and consumer prices dropped.
Futures on the Standard & Poor’s 500 Index added 0.1 percent today. The gauge climbed 1.1 percent in New York yesterday following reports central banks may take steps to help economies battered by Europe’s debt crisis amid concern a failure to contain the turmoil could roil the world’s financial markets and economy.

Greek Polls

Bloomberg News reported that U.K. Chancellor of the Exchequer George Osborne and Bank of England Governor Mervyn King are preparing two programs to increase the flow of credit. Reuters said central banks of major economies are prepared to take action if needed to boost liquidity in financial markets if the June 17 Greek elections cause tumultuous trading, citing officials linked to the Group of 20 nations.
Polls show neither party in Greece is likely to gain enough votes to secure a parliamentary majority. Syriza, led by Alexis Tsipras, has promised to annul terms of the Greek bailout proposed by the European Commission, European Central Bank and International Monetary Fund. New Democracy leader Antonis Samaras, who supports the bailout conditions, said backing Syriza will effectively remove Greece from the euro.
The MSCI Asia Pacific Index (MXAP) lost 0.8 percent this year through yesterday, compared with a 5.7 percent advance by the S&P 500 and a 1.1 percent drop on the Stoxx Europe 600 Index. Shares on the Asian benchmark are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.