Asian stocks rose for a sixth day, led by commodities producers, as prices of precious metals and coal increased and crude oil traded near a record.
Australian shares were higher in early afternoon trading on Monday led by the resources sector on stronger oil and metal prices, while Insurance Australia Group (IAG) was sharply lower as investors feared the poor performing general insurer will reject a sweetened offer from global insurer QBE Insurance Group.
‘The resources sector is doing all the work today, being propelled higher on higher oil and gold prices — there’s a general realisation that commodity prices are going stay high,’ said Michael Heffernan, an equities analyst at Sydney-based stockbroker Reynolds & Co.
At 1:20 p.m. (0320 GMT) the S&P/ASX 200 was up 33.3 points or 0.6 percent at 5,964.3, though off a high of 5,980.8 reached during morning trading
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, jumped the most in 19 years. China Shenhua Energy Co. paced gains among coal producers after prices of the alternative fuel rose to a 12-week high. Nippon Steel Corp. and JFE Holdings Inc., Japan’s two largest steelmakers, advanced after Toyota Motor Corp. said the carmaker will pay more for the alloy. Hyundai Heavy Industries Co. led shipbuilders higher after vessel prices rose.
“Steelmakers are raising prices a lot, which is good news for their stocks,” said Christian Jin, who manages $1.4 billion in equities as head of global investment at CJ Asset Management Co. in Seoul. Oil companies “can’t help but benefit” from surging crude prices, he said.
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The MSCI Asia Pacific Index climbed 0.56 percent to 154.66 as of 2:51 p.m. in Tokyo. The six-day, 3.9 percent advance is the benchmark index’s longest winning streak since July 2007. A measure of energy producers climbed 3 percent today, the biggest gain since March 28.
MSCI’s Asian index has rebounded 17 percent from this year’s low on Jan. 22 and is within 2.1 percent of erasing its loss this year as the Federal Reserve’s bailout of U.S. banks and the surge in commodity companies restored investor confidence in stocks.
Japan’s Nikkei 225 Stock Average added 0.3 percent to 14,268.14. Markets in India, Malaysia, Singapore and Thailand are closed for holidays. Most other benchmark indexes in Asia advanced, except South Korea, the Philippines, China and Vietnam, where stocks slumped for an 11th day after the central bank raised borrowing costs to tame the highest inflation since 1992.
New Zealand’s benchmark NZX-50 index fell 0.2%, or 7.83 points, to 3,649.37. Top stock Telecom was down 0.8% at NZ$3.91.
Trading in stocks and futures in China will be halted for three minutes from 2:28 p.m. local time as part of national mourning for the victims of the May 12 earthquake in Sichuan province.
Banks were mixed with takeover target St. George leading the gains, being up 1.7 percent at A$33.84, while its suitor Westpac was off 2.1 percent at $24.34 after trading ex-dividend.
‘St George is likely to remain up as it represents a once in the lifetime opportunity that might attract other bids apart from Westpac,’ Heffernan said.
The world’s top pallets supplier, Brambles, had gained 1.0 percent to A$9.00 after reporting 13 percent sales revenue growth for the first 10 months of the group’s June year.
Woodside climbed 8.6 percent to A$68.66, the biggest advance since July 1989. Inpex Holdings Inc., Japan’s largest oil explorer, gained 6 percent to 1.41 million yen. Both are poised for a record close. Cnooc Ltd., China’s biggest offshore oil producer, climbed 3 percent to HK$15.34.
Oil reached a high of $127.82 on May 16 after the dollar dropped the most in a month and Goldman Sachs Group Inc. raised its price forecast for the second half by 32 percent, citing supply constraints. UBS AG last week boosted its 2008 forecast for West Texas Intermediate, the U.S. benchmark crude variety, by 32 percent.
BHP, the world’s biggest mining company, advanced 1.7 percent to a record A$49.52. Newcrest Mining Ltd., Australia’s largest gold producer, climbed 4.5 percent to A$32.94, the biggest gain this month.
Gold rose to a three-week high in Asia on speculation the weakening dollar and rising energy costs will boost demand for precious metals as a hedge against inflation. Gold for immediate delivery rose as much as 0.4 percent to $906.24 an ounce today, the highest since April 24.
Shenhua Energy rose 7.5 percent to HK$36.55, the biggest jump since March 28. Goldman Sachs increased its price estimate for the stock by 12 percent to HK$48, analysts at the brokerage including Song Shen said in a research report today.
PT Bumi Resources, Indonesia’s largest coal producer, advanced 5 percent to 8,400 rupiah, the steepest gain in three weeks.
Thermal coal at Australia’s Newcastle port, a benchmark for Asia, climbed 0.9 percent to $134.85 a metric ton, a 12-week high, in the five days ended May 16, according to the globalCOAL NEWC Index.
Nippon Steel, the world’s second-biggest maker of the alloy, gained 4 percent to 682 yen. JFE, the third largest, added 2.7 percent to 6,190 yen.
Prices will increase by between 25,000 yen ($240) and 30,000 yen a metric ton for Toyota and by almost 30,000 yen a ton for Mitsubishi Heavy Industries Ltd., Japan’s largest maker of heavy machinery, a person close to the negotiations told Bloomberg.
Hyundai Heavy, the world’s biggest shipyard, added 5 percent to 385,500 won in Seoul, the highest since April 8. Daewoo Shipbuilding & Marine Engineering Co., the third largest, rose 4.8 percent to 45,100 won.
An index of new-ship prices tracked by Clarkson Plc, the
LG Electronics Inc., the world’s fourth-largest mobile-phone maker, fell 6.9 percent to 147,500 won, the most since Oct. 24, after JPMorgan Chase & Co. and Deutsche Bank AG cut their recommendations on the stock.