Asian Stocks Advance on Japan Bank Plan, U.S. Housing Starts

March 18 (Bloomberg) -- Asian stocks gained for a fourth day, led by financial companies, after the Bank of Japan said it will buy more government bonds from banks to spur lending and U.S. housing starts unexpectedly surged.

Mizuho Financial Group Inc., which has the most credit- related losses in Asia, rose 1.5 percent in Tokyo as the central bank pledged to buy 1.8 trillion yen ($18.3 billion) of debt each month. HSBC Holdings Plc, Europe’s largest bank, jumped 5 percent in Hong Kong, its seventh day of gains, after saying business last month was in line with its own estimates. James Hardie Industries NV, which sells home siding in the U.S., climbed 5.6 percent in Sydney on speculation demand will rise.

The MSCI Asia Pacific Index rose 0.3 percent to 77.71 as of 1:36 p.m. in Tokyo, adding to a 7.4 percent advance in the past three days. The gauge is down 13 percent this year, extending last year’s record 43 percent slump as slowing global growth pummeled Asia’s corporate earnings.

“It’s positive that governments are making concerted efforts to revive the economy but it will take some time before consumers become comfortable spending again,” said Yoji Takeda, who manages about $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “It’s hard to be 100 percent bullish on equities.”

Japan’s Topix Index lost 0.2 percent, while Hong Kong’s Hang Seng Index gained 1.5 percent. China’s Shanghai Composite Index added 0.5 percent. Most markets advanced in Asia except Taiwan, South Korea and Australia.

Housing Starts

Rio Tinto Group, the world’s third-largest mining company, sank 8.7 percent in Sydney, while Nintendo Co., maker of the Wii game console, lost 4.8 percent in Osaka, after brokerages recommended investors sell the companies’ shares. Chugai Pharmaceutical Co. slumped 7.1 percent after an arthritis treatment was linked to deaths.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent as U.S. Treasury Secretary Timothy Geithner said he plans to “wind down” American International Group Inc. following a bonus scandal.

The S&P 500 climbed 3.2 percent yesterday as the U.S. Commerce Department said work began on an annualized rate of 583,000 homes in February, a 22 percent surge from the previous month. Economists had predicted a drop to 450,000.

The MSCI Asia Pacific Index has rallied 10 percent since March 9, when the gauge dropped to the lowest in more than five years, as banks including Citigroup Inc. and JPMorgan Chase & Co. reported strong starts to the year.

Analysts’ earnings estimates for companies included in the MSCI gauge have declined 65 percent in the past 12 months as the global recession deepened, data compiled by Bloomberg show.

‘Safety Net’

Mizuho, which has declared $7.6 billion of credit-related losses, added 1.5 percent to 203 yen in Tokyo. Sumitomo Mitsui Financial Group Inc rose 1.9 percent to 3,310 yen.

The Bank of Japan said today it will buy 1.8 trillion yen ($18.3 billion) of government debt from banks each month, up from 1.4 trillion now. The central bank said yesterday it may provide as much as 1 trillion yen in subordinated loans to banks to replenish capital and keep them lending.

“A safety net has been put in place for the banks with expectations they will get capital support,” said Hideo Arimura, who oversees the equivalent of $1.9 billion at Mizuho Asset Management Co. “That’s relieved concern their shares will keep falling.”

Governments from the U.S. to Japan have stepped up measures this year to ease the financial crisis. U.S. Federal Reserve policy makers, who conclude a two-day meeting today, may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met, analysts said.

Rights Offer

HSBC gained 5 percent to HK$42.40, adding to a 35 percent advance in the past six days. Chief Executive Officer Sandy Flockhart said on March 10 that the bank had a strong performance in January and February. The bank affirmed those comments yesterday as it released details of a $17.5 billion rights offer.

James Hardie, which gets 79 percent of its revenue in the U.S., climbed 5.6 percent to A$3.96. Nissan Motor Co., which derives 40 percent of sales from North America, advanced 1.7 percent to 364 yen in Tokyo.

The finance unit of Nissan, Japan’s third-largest automaker, plans to sell $1.3 billion in securities backed by auto loans in one of the first debt offerings eligible for a U.S. government program to boost consumer lending. Investors may buy the AAA- rated bonds from Nissan with loans from the Term Asset-Backed Securities Loan Facility.

Side Effects

Rio sank 8.7 percent to A$47.47 after the stock was cut to “sell” from “hold” by Goldman Sachs JBWere Pty because of “problematic” debt and forecast aluminum losses.

Nintendo lost 4.8 percent to 28,500 yen. The stock was rated “sell” in new coverage at Deutsche Bank AG, which projected profit will decline from next fiscal year.

Chugai Pharmaceutical, the Japanese unit of Roche Holding AG, slumped 7.1 percent to 1,478 yen. Among the 4,915 patients in Japan treated with Actemra in the 10 months to February, 221 cases of severe side effects were reported, according to documents posted on Chugai Pharma’s Web site. The Asahi newspaper reported the cases earlier.