Asian Stocks Advance as Europe Concerns Ease, Commodities Gain

May 29 (Bloomberg) -- Asian stocks rose this week as concerns over Europe’s debt crisis eased after China reaffirmed its support, boosting the global economic outlook and commodity prices.

Rio Tinto Group, the world’s third-largest mining company, surged 10 percent in Sydney as concern eased that a proposed Australian mining tax will cut earnings. Fortescue Metals Group Ltd., Australia’s third-largest iron-ore producer, soared 13 percent. Poly (Hong Kong) Investment Ltd., a Chinese property developer, rallied 15 percent on speculation the nation will delay further measures to cool its property market due to Europe’s debt crisis.

“The market has priced in all the bad news for now,” said Ayako Sera, a strategist at Tokyo-based Sumitomo Trust & Banking Co., which manages the equivalent of $307 billion. “Stocks are undervalued, assuming Europe’s problems won’t spill over and cripple the global economy.”

The MSCI Asia Pacific Index climbed 1.3 percent to 113.56 this week amid speculation stock declines since April had more than reflected European debt concerns.

Gauges tracking material and energy stocks on the MSCI Asia Pacific Index climbed more than 3 percent, the biggest gains among its 10 industry groups.

China’s Shanghai Composite Index advanced 2.8 percent, and Hong Kong’s Hang Seng Index gained 1.1 percent. Japan’s Nikkei 225 Stock Average slipped 0.2 percent. South Korea’s Kospi Index rose 1.4 percent and Australia’s S&P/ASX 200 Index climbed 3.5 percent.

Slump Prompts Buying

The MSCI Asia Pacific Index has declined 12 percent from this year’s high on April 15 on concern some European countries will be unable to repay their debt, even after the region’s leaders unveiled a bailout plan worth almost $1 trillion.

The slump in markets has prompted AMP Capital Investors Ltd. to buy stocks and commodities, according to Nader Naeimi, a strategist at the Sydney-based money manager. Companies in the MSCI Asia Pacific Index are valued at an average of 14.4 times estimated earnings, near the lowest level since January 2009.

“We’ve got bad news just about every place you can look but on the other hand, we’ve got rising earnings and better economic conditions in most of the world,” Donald Gimbel, senior managing director at Carret Asset Management LLC, said in a Bloomberg Television interview. “Now is probably an opportune time to pick up some of the bargains that have been created over the past two or three weeks.”

Australia Tax Changes?

Rio Tinto surged 10 percent to A$68.20. BHP Billiton Ltd., the world’s No. 1 mining company, climbed 6 percent to A$38.97. Fortescue soared 13 percent to A$4.19.

The Australian newspaper reported the government may raise the lower limit for its proposed mining tax from 6 percent to 11 or 12 percent of company returns. Australia said this month it would impose a 40 percent tax on mining profits from 2012.

The London Metal Exchange Index, a measure of six metals including copper and zinc, advanced 0.8 percent this week.

Poly (Hong Kong) Investment Ltd., a Chinese property developer, climbed 15 percent to HK$7.81 in Hong Kong. Guangzhou R&F Properties Co., the largest developer in the southern Chinese city, gained 14 percent to HK$10.08.

China should be cautious in introducing new tightening measures as the global economic environment is complex, Xu Lianzhong, an official with the National Development and Reform Commission’s price monitoring center, wrote in a commentary published May 24 in the China Securities Journal. The European debt problem is one of many global economic uncertainties that China faces, Xu wrote.

Reliance Rapprochement

“Any indication China will take a measured approach to controlling overheating in some sectors, rather than crushing economic activity generally, means people can start to check this big item off the ‘macro concerns’ list,” said Prasad Patkar, who helps manage about $1.7 billion in Sydney at Platypus Asset Management Ltd.

Reliance Natural Resources Ltd. soared 18 percent to 52.5 rupees in Mumbai. It was among companies controlled by Mukesh Ambani and Anil Ambani after the brothers moved to end a five- year feud that split India’s second-biggest group. Mukesh, 53, and 50-year-old Anil issued almost identical statements May 23, saying they were “hopeful and confident” of creating an “environment of harmony, co-operation and collaboration” after ending a 2006 accord to not compete.