Asian stocks rose, driving the MSCI Asia Pacific Index up the most since May, as the United Arab Emirates' pledge of support for banks eased concerns that losses from Dubai World's possible default will escalate.
National Australia Bank and Commonwealth Bank of Australia climbed more than 3 per cent, leading Australia's biggest banks higher after they said they don't expect "material" losses from Dubai. Sony and Nissan, which get at least a fifth of their sales from North America, gained 4 per cent in Tokyo as the yen fell against the dollar.
The MSCI Asia Pacific Index rose 2.5 per cent to 116.79 as in Tokyo, the biggest gain since May 19. The gauge lost 2.6 per cent last week, the largest weekly drop in eight, as Dubai World, the investment company burdened by $US59 billion of liabilities, sought to delay repayment on much of its debt. The MSCI World Index rose 0.6 per cent today from a three-week low.
"There is relief that things are not as serious as they might be," said Matt Riordan, who helps manage about $US5.1 billion at Paradice Investment Management in Sydney. "The risk of a serious contagion affecting the global financial system doesn't now seem likely or probable."
Japan's Nikkei 225 Stock Average advanced 2.4 per cent to 9298.93. South Korea's Kospi Index gained 2.3 per cent. Australia's S&P/ASX 200 Index gained climbed 2.5 per cent.
China's Shanghai Composite Index added 1.1 per cent as the Politburo, the Communist Party's top decision-making body, said the nation will maintain stimulus policies next year. Hong Kong's Hang Seng Index rose 2.7 per cent.
Australian banks
Futures on the US Standard & Poor's 500 Index added 0.6 per cent. The gauge slid 1.7 per cent on November 27 amid Dubai concerns. The United Arab Emirates' central bank said banks will be able to borrow money for half a per centage point above the three-month local benchmark interest rate.
Finance companies were the biggest boost to the MSCI Asia Pacific Index after National Australia Bank, Commonwealth Bank, ANZ and Westpac denied any "material" losses from Dubai World.
NAB, the country's third-biggest lender by market value, gained 5 per cent to $28.36, while Commonwealth Bank, the largest, rose 3.7 per cent to $52.46. ANZ added 3.7 per cent to $21.98. Westpac climbed 3 per cent to $23.83.
"It helps that the Australian banks have said they don't have much of an exposure," said Ben Potter, a research analyst at IG Markets in Melbourne. "I think global markets have already started looking past this whole thing."
Yen's appreciation
Fortescue Metals Group advanced 4 per cent to $4.17 after Australia's third-biggest iron ore producer was raised to "hold" from "sell" at Deutsche Bank.
Stocks of MSCI Asia Pacific Index are valued at 21 times estimated earnings following a rally since March, compared with 17 times for the S&P 500 and 15 times for Europe's Dow Jones Stoxx 600 Index. MSCI's Asia gauge has climbed 66 per cent from a more than five-year low on March 9 amid signs government stimulus measures were reviving economies around the world.
"Some people also saw the Dubai issue as an excuse for some profit taking after a big run," said Paradice's Riordan.
Sony, the maker of PlayStation gaming consoles, rose 4 per cent to 2355 yen as the yen halted gains that took it to a 14-year high against the dollar, boosting the outlook for Japan's export revenues. Nissan added 4 per cent to 629 yen.
The yen depreciated to 87.16 today against the US dollar, compared with 86 at the close of stock trading in Tokyo on November 27, when Japan's currency reached the strongest level versus the greenback since July 1995.
"Stocks that plunged last week due to a weaker dollar and the Dubai shock will rebound as the yen's appreciation paused," said Tomochika Kitaoka, a senior strategist at Mizuho Securities in Tokyo. "Investors should be still nervous about the currency movement."
