Asian Stocks Advance on Commodities, China Growth Speculation

July 2 (Bloomberg) -- Asian stocks climbed on speculation China’s economy will avoid the recession of global counterparts and as higher commodities prices drove gains by resource shares.

Newcrest Mining Ltd., Australia’s largest gold producer, rose 2.8 percent after the precious metal halted a two-day slide. Nickel producer Pacific Metals Co. jumped 5.6 percent as Merrill Lynch & Co. boosted its share price target citing Chinese demand. Ping An Insurance (Group) Co., China’s No. 2 insurer, surged 5.8 percent after a brokerage upgrade. Shinsei Bank Ltd. and Aozora Bank Ltd. led Japanese banks lower after agreeing to a merger.

“Investors are feeling the global economy is getting better, but the hazy outlook means they can’t totally buy into this recovery story,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co. “We have no reason to sell but no definitive clue to buy.”

The MSCI Asia Pacific Index advanced 0.5 percent to 103.63 as of 12:09 p.m. in Tokyo. The benchmark rallied 15 percent in the first six months of this year, outpacing gains by benchmark indexes in the U.S. and Europe. Companies in Asia traded at 23.5 times their estimated net income yesterday.

Japan’s Nikkei 225 Stock Average was little-changed at 9,940.12. Shares elsewhere in the region advanced, except in South Korea, Singapore and Vietnam. Hong Kong’s Hang Seng Index jumped 1.6 percent after the market was closed yesterday for a holiday.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent in trading today after the measure advanced 0.4 percent in New York yesterday. The Institute for Supply Management said yesterday its factory index rose in June for a sixth month to 44.8, still below the 50 threshold that divides expansion and contraction.

China Insurers

A report from ADP Employer Services weighed on U.S. equities as it showed more Americans lost their jobs last month than economists had estimated.

“Though some may say employment is a lagging indicator, it affects household income and consumer spending,” said Ichiyoshi’s Akino.

A gauge of six metals in London jumped 2.9 percent yesterday, the most since June 24. Gold futures snapped a two- day drop, climbing 1.5 percent in New York.

Chinese Insurers

Newcrest gained 2.8 percent to A$31.12. Pacific Metals jumped 5.6 percent to 772 yen after Merrill Lynch analyst Takashi Enomoto lifted his price estimate on the stock by 20 percent saying steel production in China is boosting nickel demand. China Petroleum & Chemical Corp., also known as Sinopec, climbed 1.9 percent to HK$6.02 after Merrill resumed coverage of the company with a “buy” recommendation.

Ping An gained 5.8 percent to HK$55.55. The stock was raised to “outperform” from “in-line” by Peter O’Brien at Cazenove Asia Ltd. The insurance industry should benefit from investment deregulation and ongoing growth in demand for insurance as China ages.

China Life Insurance Co., the nation’s biggest, gained 2.6 percent to HK$29.25. China Insurance International Holdings Co., the country’s biggest insurer in overseas markets, rose 4 percent to HK$17.06 and is O’Brien’s top pick, he wrote.

China’s manufacturing expanded for a fourth month in June, a government survey showed yesterday. China’s economy may keep improving in the third and fourth quarters, enabling the nation to meet its 8 percent economic growth target for this year, central bank Governor Zhou Xiaochuan said this week.

Real Estate Exposure

Shinsei, the former Long Term Credit Bank of Japan which collapsed in 1998, lost 4.5 percent to 150 yen, while Aozora, controlled by Cerberus Capital Management LP, slumped 4.6 percent to 144 yen. The companies agreed to combine yesterday at a 1-to-1 ratio in a deal that will create Japan’s sixth-largest lender.

“We believe there are risks that once the two banks merge, common financial problems such as the concentrated exposure to the real estate sector and the insufficiency of deposits may become even more serious,” Shinichi Ina, an analyst at Credit Suisse Group AG, wrote in a report.

Electronics retailer K’s Holdings Corp. climbed 5.5 percent to 2,515 yen. The retailer likely saw a 40 percent jump in profit last quarter as the Japanese government’s incentive program for the purchase of low-emission appliances increased sales, the Nikkei newspaper reported. Yamada Denki Co., Japan’s largest electronics retailer, rose 2.7 percent to 5,820 yen.

Hitachi Ltd. surged 4.4 percent to 311 yen. The company plans to expand its production capacity for lithium-ion batteries by more than 600 percent by “next autumn,” the Nikkei said today.