Asian stocks rose, led by mining and technology companies, as the US Federal Reserve said the pace of economic contraction is slowing and South Korea raised its gross domestic product forecast.
Komatsu, an earthmoving equipment maker that gets a quarter of its sales from the Americas, added 3.5 per cent in Tokyo as orders for US durable goods unexpectedly increased. Rio Tinto, the world's third-biggest mining company, climbed 3.3 per cent in Sydney after metals prices gained. Mitsubishi Electric surged 7.2 per cent after the Nikkei newspaper reported the company is planning to set up solar power manufacturing facilities in the US and Europe.
The MSCI Asia Pacific Index rose 0.9 per cent to 101.74 in afternoon trading in Tokyo. Optimism government stimulus measures worldwide will revive the global economy has boosted the gauge by 44 per cent from a more than five-year low on March 9.
``We've got out of the worst period thanks to those policy measures,'' said Yoshihiro Ito, senior strategist at Okasan Asset Managemen. ``I still believe the global economy will start to recover in the second half.''
Japan's Nikkei 225 Stock Average advanced 1.7 per cent to 9,754.33. Kubota and Iseki climbed more than 4 per cent after the Nikkei newspaper said the makers of farm equipment are seeking a greater presence in China.
South Korea's Kospi Index gained 2.3 per cent as the government said the economy will shrink 1.5 per cent this year, less than an earlier forecast for a 2 per cent contraction. Australia's S&P/ASX 200 Index added 1 per cent after the International Monetary Fund raised its 2009 and 2010 growth forecasts for the country's economy.
Durable goods
Futures on the Standard & Poor's 500 Index added 0.2 per cent. The gauge rose 0.7 per cent in New York yesterday. US orders for items meant to last several years increased 1.8 per cent in May, a Commerce Department report showed. Economists had estimated a 0.9 per cent drop.
Komatsu, which gets more than 80 per cent of revenues supplying construction and mining equipment, added 3.5 per cent to 1,480 yen. Honda Motor Co., which derives 45 per cent of its sales in North America, gained 2.1 per cent to 2,610 yen.
The durable goods report boosted speculation demand for resources will increase. A gauge of six metals in London climbed 4.8 per cent yesterday, the most since March 19, while copper jumped 3.1 per cent in New York.
Rio Tinto climbed 3.3 per cent to $51.20. BHP Billiton, the world's biggest mining company, gained 1.5 per cent to $34.23. Mitsubishi Corp., which gets more than half of its profits from commodities, advanced 4.1 per cent to 1,811 yen.
`Glimmers of hope'
``We're getting glimmers of hope,'' said Tim Schroeders, who helps manage $1.25 billion at Pengana Capital in Melbourne. ``The latest reports on consumer durables show consumers are becoming a bit more active and purchasing has returned to the marketplace.''
Financial markets have improved, the Fed said in a statement after a two-day meeting in Washington where it also kept the benchmark interest rate between zero and 0.25 per cent. The Organization for Economic Cooperation and Development also lifted its forecast for growth in the economies of its 30 member nations yesterday for the first time in two years.
Optimism for an economic recovery had driven the average valuation of companies in the MSCI Asia Pacific Index to 1.5 times the net value of assets as of June 12, according to Bloomberg data. That was the highest level since Sept. 26. The gauge sank 3.5 per cent last week, its first weekly drop in five.
Solar power
Mitsubishi Electric surged 7.2 per cent to 610 yen. The company plans to build plants for assembling solar power generation systems in Europe and the US next fiscal year, the Nikkei newspaper reported, without citing anyone.
Samsung Electronics, the world's biggest maker of liquid-crystal display televisions, added 1.7 per cent to 590,000 won after a US trade agency said some of the company's products had been infringed by Sharp Corp. Some Sharp LCD televisions and computer monitors should be banned from the US, the country's International Trade Commission said yesterday.
Harvey Norman, Australia's No. 1 electronics retailer, climbed 3.8 per cent to $3.02. David Jones, the country's second-largest department store chain, gained 1.5 per cent to $4.06.
The IMF said Australia's economy will contract 0.5 per cent this year, compared with a 1.4 per cent decline estimated in April. The economy will grow 1.5 per cent next year, the IMF said, after previously forecasting a 0.6 per cent increase.
In Tokyo, Kubota rose 4.7 per cent to 752 yen, while Iseki advanced 6.9 per cent to 388 yen.
Kubota plans to increase production of combines and rice transplanters in China as government subsidies help to increase demand for the machines, the Nikkei reported, without saying where it obtained the information. Iseki has offered expertise to a Chinese farming equipment maker and will start producing harvesters there in August, according to the report.
