Asian Stocks, Won Snap Two-Day Drop

Asian stocks and South Korea’s won rose for the first time in three days, and copper headed for the largest increase in a week after Chinese inflation eased and a pledge to resign by Italy’s prime minister eased concern Europe’s debt crisis will worsen.

The MSCI Asia Pacific Index rallied 1.4 percent as of 11:40 a.m. in Tokyo. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong jumped 2.6 percent. Standard & Poor’s 500 Index futures slipped less than 0.1 percent. The won strengthened 0.4 percent after South Korea’s unemployment rate unexpectedly fell. The euro was little changed at $1.3835. Copper rose 1.7 percent, while oil advanced for a sixth day. The cost of insuring Asia-Pacific debt from default decreased.

China’s consumer price inflation cooled to 5.5 percent in October from 6.1 percent the previous month, while producer prices fell by more than economists had forecast, signaling the government may be able to reduce measures to cool its economy. Italy’s Silvio Berlusconi agreed to step down after the approval of an austerity plan in a vote next week, following a surge in the nation’s bond yields to a euro-era record.

“Now that we see inflation easing, it suggests that Asian central banks can switch to a more pro-growth strategy,” said John Woods, Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “The markets will take the near-term resolution of political uncertainties in Europe positively,”

About seven shares advanced for every two that fell on MSCI’s Asian index, helping the gauge rebound from a two-day 0.9 percent loss. Japan’s Nikkei 225 Stock Average added 0.9 percent, Australia’s S&P/ASX 200 Index climbed 1.4 percent and South Korea’s Kospi Index gained 0.3 percent.
Nomura, Olympus

Nomura Holdings Inc. rose 7.4 percent in Tokyo, rebounding from yesterday’s 15 percent plunge, after Japan’s biggest securities firm said it is unaware of any involvement in Olympus Corp.’s concealment of losses. Olympus sank 20 percent, extending yesterday’s 29 percent plunge.

Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender by market value, gained 3 percent in Hong Kong, pacing an advance among Chinese companies. The decline in consumer prices matched analysts’ forecasts and was the slowest since May. The producer price index was expected to decline to 5.8 percent, according to economists surveyed by Bloomberg News.

“The trend is in favor of China taking measures to improve economic development,” Peter So, co-head of research at CCB International Securities Ltd., said in a Bloomberg Television interview in Hong Kong.
Copper, Oil

Copper for three-month delivery rose as much as 2.1 percent to $7,959.75 a metric ton on the London Metals Exchange, rebounding from a three-day, 1.3 percent decrease. Nickel added 2 percent and tin climbed 0.8 percent.

December-delivery oil rose 0.3 percent to $97.06 a barrel on the New York Mercantile Exchange. Prices climbed 1.3 percent yesterday to the highest settlement since July 28. U.S. gasoline supplies dropped 1.49 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show they rose 1 million barrels, according to a Bloomberg News survey.

South Korea’s won strengthened as much as 0.9 percent to 1,111.38 per dollar. The unemployment rate fell to a three-year low of 3.1 percent in October from 3.2 percent the previous month, Statistics Korea said today. The median estimate in a Bloomberg News survey of 11 economists was for an increase to 3.3 percent. Taiwan’s dollar rose 0.2 percent to NT$30.055, and Malaysia’s ringgit gained 0.5 percent to 3.1120.
Berlusconi’s Pledge

The 17-nation euro traded at 107.40 yen from 107.52 yesterday and held onto a 0.4 percent gain versus the dollar. Berlusconi’s pledge to resign came after he failed to muster an absolute majority on a routine parliamentary ballot after key lawmakers defected from his party this week.

The yield on Italy’s benchmark 10-year bond jumped 11 basis points yesterday to 6.77 percent before Berlusconi’s announcement, the most since the euro’s introduction in 1999 and near the 7 percent level that drove Greece, Ireland and Portugal to seek international bailouts. The extra premium investors demand to hold the debt instead of German bunds closed at a euro-era record 497 basis points.

The cost of protecting Asia-Pacific corporate and sovereign bonds from default decreased, with the Markit iTraxx Japan index falling three basis points to 175 basis points, Citigroup Inc. prices show. The gauge is set for its biggest one-day drop since Nov. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Treasury 10-year yields were little changed at 2.07 percent, following a four-basis-point increase yesterday. The U.S. is scheduled to sell $24 billion of 10-year securities today and $16 billion of 30-year bonds tomorrow, after an auction of three-year notes yesterday attracted the highest demand on record. (Bloomberg)