Asian Stocks Head for Third Weekly Gain; BHP, Rio Tinto Surge

June 5 (Bloomberg) -- Asian stocks gained, with the MSCI Asia Pacific Index set for its third weekly advance, after Rio Tinto Group scrapped an investment by China in favor of a $15.2 billion share sale as commodity prices rebound.

Rio surged 9.9 percent in Sydney after saying it will sell shares and form a $5.8 billion venture with BHP Billiton Ltd. instead of pursuing Aluminum Corp. of China’s investment. BHP, the world’s biggest mining company, climbed 8.1 percent. Inpex Corp., Japan’s largest oil explorer, jumped 5.6 percent after oil prices rose to a seven-month high. Mazda Motor Corp. climbed 8.4 percent as Nikko Citigroup Ltd. raised its stock forecast.

“Investors are looking for a reason to stay positive and the Rio and BHP news provides that,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “The bull market for resources stocks continues today.”

The MSCI Asia Pacific Index added 0.3 percent to 103.49 as of 1:07 p.m. in Tokyo. The gauge has climbed 1.4 percent this week as a Chinese purchasing manager’s index and better-than- expected Australian gross domestic product figures fueled optimism that the global economy is recovering. The measure climbed 47 percent from a more than five-year low on March 9.

Japan’s Nikkei 225 Stock Average gained 0.5 percent as a weaker yen boosted the earnings prospects for companies reliant on overseas sales. Australia’s S&P/ASX 200 Index rose 1.1 percent. New Zealand’s NZX 50 Index added 0.5 percent.

Futures on the U.S. Standard & Poor’s 500 Index added 0.1 percent. The gauge climbed 1.2 percent after analysts recommended buying bank shares. Keycorp surged 20 percent after RBC Capital Markets named the bank a “top pick,” while Goldman Sachs Group Inc. rose 5.2 percent as Sanford C. Bernstein & Co. raised the shares to “outperform.”

Rio Share Sale

Rio Tinto, the world’s third-largest mining company, surged 9.9 percent to A$73.50. Today’s transactions allow Rio to reduce $38.9 billion in debt without selling stakes in its largest mines to Aluminum Corp., which investors said favored the Chinese company. Chinalco, as Aluminum Corp. is known, is China’s largest producer of the material.

“The Chinalco deal was wrong in a strategic sense,” said Prasad Patkar, who helps manage close to $1 billion at Platypus Asset Management in Sydney. “The market was right in marking the management and board down for trying to jam it down shareholders’ throats.”

Investors will be offered 21 new shares in Rio for every 40 they hold at 1,400 pence each, 49 percent below yesterday’s close in London, the company said. BHP, which agreed to pay Rio $5.8 billion to form an Australian iron ore joint venture, climbed 8.1 percent to A$37.96.

Best Performers

Mining and energy companies are the best performers of the MSCI Asia Pacific Index’s 10 industry group in the past month as prospects of a global recovery fueled optimism that demand for commodities will increase.

The Bank of Japan may upgrade its economic assessment of the country for a second straight month at the conclusion of a policy meeting beginning June 15, the Mainichi newspaper reported. Australia’s statistics office said this week gross domestic product gained 0.4 percent in the first quarter from the previous three months, compared with economist forecasts for a 0.2 percent contraction.

“The better-than-expected economic data is convincing people the worst is over,” said Will Seddon, who helps manage $250 million at White Funds Management Pty. in Sydney. “People who are underweight or short don’t want to get left out of the rally.”

Stock gains since March have driven the average valuation of companies on MSCI’s Asian index to 1.5 times the book value of assets, the highest level since Oct. 1.

Oil Prices

Inpex climbed 5.6 percent to 835,000 yen. Santos Ltd., Australia’s third-largest oil company, gained 3.6 percent to A$14.99.

Crude oil rose after Goldman Sachs said prices may reach $85 a barrel by the end of the year as world demand recovers and supplies shrink. Oil climbed 4.1 percent to $68.81 a barrel in New York, the highest settlement since Nov. 4 after the bank increased its year-end forecast from $65 and withdrew a prediction that prices will dip prior to a rally.

Mazda, which makes 28 percent of its revenue in North America, climbed 8.4 percent to 272 yen. Nikko Citigroup raised its target price to 350 yen from 257 yen, citing expectations for an earnings recovery in the second half of the business year.

Mazda shares also rose after the yen declined yesterday versus 15 of the 16 most-traded currencies on speculation Japanese investors are sending funds overseas to buy higher- yielding assets. The yen traded at 96.56 per dollar in Tokyo, after declining 0.6 percent yesterday to its lowest since May 29.

A weaker yen boosts the value of Japanese companies’ dollar-denominated sales. Sony Corp., which gets 24 percent of its revenue from the U.S., climbed 2.1 percent to 2,695 yen.