Asian Stocks Gain a Seventh Week in Eight on Economic Optimism

May 2 (Bloomberg) -- Asian stocks advanced for the seventh time in eight weeks, sending a regional index to the highest level in four months, as production and earnings figures lifted confidence the region’s economies have started to recover.

Canon Inc., the world’s largest seller of digital cameras, gained 8.1 percent after cost cuts helped the company boost its profit forecast and Japan’s production levels increased for the first time in six months. Li & Fung Ltd., the biggest supplier of toys and clothes to Wal-Mart Stores Inc., added 10 percent ahead of a report that Chinese manufacturing increased for a fifth month. Lion Nathan Ltd. soared 41 percent after receiving a takeover offer.

The MSCI Asia Pacific Index added 1.6 percent this week to 90.91, a level not seen since Jan. 7. Asian markets have rallied 29 percent since the MSCI benchmark dropped to an almost six- year low on March 9.

“All the things are in place for the bear market to have ended,” Anthony Bolton, London-based president of investments at Fidelity International, which oversees $157.3 billion, told Bloomberg Television in Hong Kong. “We’re going to see a slow economic upturn, but that’s enough for the stock market. If you wait for things to get better, you’ll miss the rally.”

Japan’s Nikkei 225 Stock Average surged 3.1 percent to 8,977.37. Indonesia’s Jakarta Composite Index posted the region’s largest gain with an 8.3 percent advance after companies including PT Bank Rakyat Indonesia, the country’s No. 2 financial services provider, reported rising profits.

Swine Flu, Chrysler

Markets shrugged off the outbreak of swine flu, a disease that has reached 11 countries since last week and pushed the World Health Organization to raise its six-tier alert system to 5, one notch below a pandemic. The bankruptcy of Chrysler LLC on April 30 also failed to derail market gains.

MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to idle factories and lay off workers.

The gauge has rallied amid signs government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise in April after a year of falling predictions, data compiled by Bloomberg show.

Canon gained 8.1 percent to 3,130 yen after boosting its earnings estimate for the year ending in December by 12 percent on April 30. Fujitsu Ltd., Japan’s largest business computer maker, extended gains by 21 percent to 496 after forecasting a return to profitability this year. Honda Motor Co., Japan’s second-largest automaker, rose 6.5 percent after predicting it will make a profit this year as demand recovers in the U.S.

BOJ: 2010 Recovery

A Japanese government report on April 30 showed that industrial output rose for the first time in six months and at twice the pace predicted by economists. The Bank of Japan said on April 30 it expects the economy to return to growth in 2010 after a 3.1 percent contraction this year.

Li & Fung gained 10 percent to HK$22. Shimao Property Holdings Ltd., the Chinese developer controlled by billionaire Xu Rongmao, jumped 19 percent to HK$8.73. Morgan Stanley analyst Derek Kwong boosted the stock to “overweight” from “equal- weight” on April 28, citing a strong sales outlook.

China’s manufacturing purchasing manager’s index rose for a fifth month, according to a May 1 report from the National Bureau of Statistics and Federation of Logistics and Purchasing.

Taiwan-China Thaw

“While a fifth monthly improvement in the PMI reinforces our confidence that the Chinese economy is starting to turn around, it appears sensible to guard against excessive optimism,” Jing Ulrich, Hong Kong-based chairwoman of China equities at JPMorgan Chase & Co., said in an e-mail.

Lion Nathan, Australia’s second-largest brewer, jumped 42 percent to A$11.74 after Kirin Holdings Co., Japan’s largest beverage maker, agreed to pay A$3.5 billion ($2.5 billion) for the 54 percent of Lion Nathan it doesn’t already own.

Taiwan’s Taiex index posted its steepest gain since 1991 on April 30 as the island allowed Chinese investments for the first time since a civil war ended six decades ago. Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, surged by 7.6 percent to NT$37.65 after China Mobile Ltd. agreed to buy a 12 percent stake for NT$17.8 billion ($529 million).