Asian Stocks Advance

Asian stocks climbed, driving benchmarks in South Korea and Hong Kong to records, on takeover speculation in the metals industry and higher commodity prices.

Rio Tinto Group, the world's third-largest mining company, climbed to a new high after the Times of London said it will bid for Alcan Inc. South Korea's Posco paced gains among Asian steel producers after Chaparral Steel Co. agreed to be bought for $4.22 billion.

``We'll continue to see a spate of takeovers across the region,'' said Nicole Sze, a Singapore-based analyst at Bank Julius Baer & Co., which manages $350 billion worldwide. Mergers and acquisitions ``help create positive sentiment as investors look to see who the next target will be.''

Samsung Electronics Co. paced gains in South Korea after an interest rate increase reinforced confidence in the nation's economic recovery. China Mobile Ltd. rose in Hong Kong after Citigroup Inc. recommended investors buy the stock.

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.4 percent to 157.74 at 12:55 p.m. in Tokyo, after falling yesterday by the most in two weeks. A measure of materials shares including BHP Billiton Ltd. posted the second- biggest advance among its 10 industry groups.

All regional stock benchmarks advanced. Japan's Nikkei 225 Stock Average added 0.3 percent to 18,107.19, as the Bank of Japan kept its key interest rate at 0.5 percent. Nintendo Co. climbed after the yen weakened against the dollar and euro, and U.S. Federal Reserve officials said the world's biggest economy will weather a housing slump.

M&As

U.S. shares gained yesterday, spurred by speculation of takeovers in the metals industry and as concern eased that the subprime loan crisis would affect other areas of the economy.

BHP, the world's biggest mining company, climbed 1.5 percent to A$38.36. Nippon Mining Holdings Inc., Japan's No. 1 copper smelter, rose 0.2 percent to 1,240 yen. Zinifex Ltd., the world's third-largest zinc producer, gained 1.4 percent to A$20.47.

A measure of six metals traded on the London Metal Exchange added 1.1 percent yesterday. Copper advanced 0.4 percent, zinc gained 2.1 percent and nickel climbed 2 percent.

Rio Tinto shares rose 2 percent to A$104.84. The stock was set to close at an all-time high after the Times of London reported the company is ``poised'' to make a $34 billion, $90 a share bid for Alcan, a Montreal-based aluminum producer.

A formal offer from Rio is expected within two weeks, the newspaper said, citing bankers it didn't identify.

Posco, Steelmakers

``I would bet both BHP and Rio are running the numbers over Alcan, and maybe other companies, with a view to making a bid,'' said Richard Wallace, who helps manage $138 million at Wallace Funds Management in Sydney. ``As an investor you don't want to stand in the way of a train, so you'll see plenty of buying of the shares ahead of a potential announcement.''

Steel stocks tracked gains by U.S. peers yesterday after Gerdau Ameristeel Corp., the U.S. unit of Latin America's biggest steelmaker, agreed to buy Texas-based Chaparral Steel for $86 a share. Posco, Asia's No. 3 steelmaker, jumped 4.8 percent to 516,000 won, set to close at a record high. Separately, Daishin Securities raised its six-month price estimate to 600,000 won.

Sumitomo Metal Industries Ltd., Japan's third-largest steelmaker, added 0.6 percent to 735 yen. BlueScope Steel Ltd., the biggest producer in Australia, rose 3 percent to A$11.17.

In Japan, Nintendo, the world's No. 1 maker of hand-held game consoles, climbed 1.4 percent to 49,300 yen. Matsushita Electric Industrial Co., the largest consumer-electronics maker, added 1.5 percent to 2,350 yen.

Yen Declines

The yen yesterday weakened to as low as 122.52 per dollar in New York from 121.29 yen as of 5 p.m. in Tokyo. It recently traded at 122.20. The Japanese currency dropped to 168.15 to the euro in New York from 166.63 in Tokyo yesterday.

A weaker Japanese yen inflates the value of exporters' overseas sales and make their products more competitive.

Traders favored the dollar after comments from U.S. officials yesterday that eased concerns about subprime, or higher risk, mortgages. Robert Steel, a Treasury undersecretary, said a sell-off in subprime securities ``does not seem to be a systemic issue.'' Fed Governor Kevin Warsh said subprime-mortgage delinquencies don't pose broader risks to the financial system.

South Korean stocks advanced even as the central bank raised its key interest rate to a six-year high. Lee Seong Tae, the governor of the Bank of Korea, said the higher rate will still support economic growth.

Upgrades

Samsung Electronics, the world's biggest computer-memory maker, gained 2.1 percent to 648,000 won. Hynix Semiconductor Inc., the second largest, added 2 percent to 38,950 won.

``Rates weren't raised because of financial problems but because economic growth is expected to speed up, as the central bank had said earlier,'' said Choi Chang Hoon, who helps manage $870 million at Woori Credit Suisse Asset Management Co. in Seoul. ``People expect the global economies to improve, so the exporters such as tech companies and automakers should do well in the second half.''

Separately, Korea Investment & Securities Co. lifted its six-month price estimate for Samsung by 6 percent to 700,000 won, and for Hynix by 5.1 percent to 41,000 won. The computer-memory industry will expand as use of Microsoft Corp.'s Windows Vista operating system spreads and the size of data exchanged over the Internet climbs, Greg Roh, an analyst, wrote in a report.

China Mobile, the world's largest mobile-phone operator by users, climbed 3 percent to HK$88.50 after the stock was raised to ``buy'' from ``hold'' at Citigroup. The company will dominate China's telecommunications industry in the next two-to-three years, analysts at the investment bank wrote in a report.

source:bloomberg.com