Energy and banking stocks lift Asia

Asian equities advanced across the board on Tuesday, riding on the back of gains in energy-related companies and banking stocks while a weaker yen gave investors the chance to buy up exporting shares in Tokyo.

Presidents’ Day in the US on Monday meant markets in the world’s largest economy were closed, giving investors in the Asian region some respite from bad news about the credit crisis, the fate of the monolines and the subprime fallout. Instead, markets got a lift from news out of Europe that Barclays and Lloyds TSB may raise dividend payouts.

Adding to the more optimistic mood across Asia, the Bank of China announced that it had apportioned enough to cover subprime exposure and expected to report a profit increase for 2007. The MSCI Asia Pacific Index rose 1.6 per cent to 146.21.

Over in Pakistan, investors appeared relieved after a generally peaceful parliamentary election on Monday. The Karachi 100 index was recently up 3 per cent at 14,784.28 .

In Tokyo, the Nikkei 225 closed up 0.9 per cent at 13,757.91, a two-week high, led by automakers, consumer electronics makers, machinery makers and trading companies, which have investments in upstream energy businesses. The broader Topix rose 0.9 per cent to 1,345.29.

“What we’re seeing in Japan is investors picking up those stocks that are sensitive to the economic cycle as they had previously been oversold,” said Mamoru Shimode, an equity strategist at Deutsche Securities in Tokyo. “There has been a theme of recoupling in the market, where obviously the impact of a slowdown in the US is unavoidable but there is strength in emerging market economies.”

Honda Motor rose 3.6 per cent to Y3,410, while TDK rallied 2.8 per cent to Y8,050, and factory robot maker Fanuc gained 2.2 per cent to Y10,230. Exporters’ shares were aided by a retreat in the yen to its weakest in nearly two and a half months. The currency recently traded against the dollar at 107.80.

Mitsubishi Corp, the trading company, rallied 4.4 per cent to Y3,290, while Itochu gained 7.9 per cent to Y1,167. Oil traded near $96 a barrel, a boost to investors keen to buy energy stocks. Platinum set yet another record high, recently trading around $2,123.50, as power shortages in South Africa continued.

Komatsu, the construction machinery maker, gained 2.8 per cent to Y2,730 after it said it would raise prices of its machinery to cover the increasing costs in steel and raw materials it faces.

Toshiba, which finally officially announced its withdrawal from the HD DVD business, ended t0.6 per cent lower at Y824, giving up gains made on Monday and early Tuesday.

Mitsui Fudosan fell 0.4 per cent to Y2,285 after saying it will buy Frontier Reit Management, the company that manages assets for Frontier Real Estate Investment Corp., from Japan Tobacco. Frontier Real Estate Investment Corp rallied 16 per cent to Y760,000.

The main themes of the day were the rising shares of banks and energy-related companies. Australian stocks closed up 1.1 per cent at 5,619.10, while in Seoul the Kospi rose 1.4 per cent to 1,720.52. The Hang Seng rallied 1.5 per cent to 24,123.17, while the index of mainland China shares traded in Hong Kong gained 2.5 per cent to 13,972.94.

In Australia, investors bought up shares of banks that were pummelled on Monday in the wake of Australia and New Zealand Banking’s provisions for indirect exposure to the credit turmoil in the US. ANZ rose 0.6 per cent to A$22.60, while National Australia Bank rallied 3.2 per cent to A$30.46. Westpac Banking rose 2.9 per cent to A$23.15.

Shares of Power Resources Trading shot up 28 per cent to A$0.25.5 on their trading debut. The uranium exploration company’s issue price was A$0.20.

The Australian dollar was also active against its US counterpart, strengthening to near three and a half month highs and recently trading at 0.9196. Demand for the Australian currency grew after the minutes of the country’s latest central bank policy meeting revealed that policymakers debated raising rates as much as 50 basis points.

Higher commodity prices drove mining stocks higher. Iron ore miner BHP Billiton rallied 1.9 per cent to A$39.70, after rival Vale of Brazil secured a 65 per cent increase in prices to Asian steelmakers for the year starting April 1. Rio Tinto added 1.9 per cent to A$136.50.

In Hong Kong, Bank of China shares jumped 7.8 per cent to close at HK$3.3, while HSBC rose 1.6 per cent to HK$114.40. Investors were also paying close attention to China’s January inflation rate, which surged to 7.1 per cent, the highest in 11 years.

Singapore’s Straits Times index closed up 0.7 per cent, while the Sensex in Mumbai was recently up 0.7 per cent. Shanghai’s composite index finished 2.1 per cent higher at 4,664.295, reversing early mild losses.