Asian stocks rose for the first time in four days on optimism China's government may relax policy tightening measures. The yen depreciated on speculation the central bank will weaken the currency.
The MSCI Asia Pacific Index gained 0.4 per cent to 115.77 in Tokyo. Standard & Poor's 500 Index futures rose 0.2 per cent. The yen traded at 87.10 per dollar as in Tokyo from 86.69 in New York yesterday. Oil futures in New York rose 0.4 per cent to $US76.84 a barrel on speculation China demand will grow.
Investor sentiment improved as the International Strategy & Investment Group said China will relax policies that were aimed at curbing its housing industry. Chinese domestic consumption will continue to grow at a relatively fast pace in the second half of this year, a government spokesman said in Beijing today. Stocks rose even after International Business Machines Corp. and Texas Instruments Inc. reported sales that missed analyst estimates after US markets closed.
''China is a potent force of growth,'' Robert Doll, vice chairman of BlackRock Inc., said in a Bloomberg Television interview from New York. ''We do think they have the muscle to help continue the emerging markets being the leader of the world's growth scene.''
Almost two stocks advanced for each one that declined in the MSCI Asia Pacific Index today. Japan's Nikkei 225 Stock Average dropped 0.6 per cent following a holiday yesterday during which the MSCI gauge lost 0.8 per cent. Australia's S&P/ASX 200 Index and Taiwan's Taiex both advanced at least 1 per cent.
Tightening policies
Hong Kong's Hang Seng Index gained 1.4 per cent, while China's Shanghai Composite Index rose 1.5 per cent. China will ''back away'' from its tightening policies in the housing market within three months as the economy faces a bigger risk from a slowdown than inflation, International Strategy & Investment Group said.
China Resources Land, a state-controlled developer, climbed 3.6 per cent in Hong Kong. Poly Real Estate Group, China's second-largest developer by market value, rose 2.7 per cent in Shanghai. China Vanke, the nation's biggest listed property developer, gained 1.6 per cent.
SAIC Motor Corp led gains among Chinese automakers after saying its first-half profit probably quadrupled. The stock climbed 1.3 per cent.
Chinese steps to curb property prices in the world's third- largest economy and concerns about the strength of the global economy had contributed to a 4 per cent drop by the MSCI Asia Pacific Index this year.
Housing data
US housing starts fell 2.7 per cent in June, according to a Bloomberg News survey before the Commerce Department report today. The National Association of Home Builders/Wells Fargo confidence index dropped to 14 this month, the lowest level since April 2009, from 16 in June, data from the Washington-based group showed yesterday.
Hana Financial Group, South Korea's fourth-biggest financial company, fell 2.1 per cent in Seoul after reporting an unexpected decline in profit.
South Korea's won led gains among Asian currencies on optimism Chinese demand will spur regional trade as the US economy slows.
China won't face an economic slump in the second half of this year, Zhu Hongren, the Ministry of Industry and Information Technology's chief engineer, said at a briefing in Beijing today. An improved trade balance will create relatively favorable conditions for the stability of the yuan, Yao Jian, a commerce ministry spokesman, said separately.
Won, ringgit
The won strengthened 0.6 per cent to 1208.88 per dollar, after earlier losing as much as 0.2 per cent, according to data compiled by Bloomberg. Malaysia's ringgit climbed 0.3 per cent to 3.2190 and the Taiwan dollar appreciated 0.1 per cent to NT$32.118. China, including Hong Kong, is the biggest export market for South Korea, Malaysia and Taiwan.
''We're seeing offshore accounts selling US dollars with improved risk sentiment,'' said Gerrard Katz, head of foreign- exchange trading at Standard Chartered in Hong Kong. ''Equities are up modestly, and China is talking about an improved trade balance.''
The yen fell against all of its 16 major counterparts amid speculation recent gains will spur intervention by Japanese authorities to weaken the currency. Japan's currency slipped to 112.92 per euro from 112.19. It reached 86.27 per dollar on July 16, the closest it's come this year to the 14-year peak of 84.83 reached on Nov 27.
The Bank of Japan may take steps to ease monetary policy should the yen stay around 85 per dollar, Dow Jones Newswires reported yesterday, citing people familiar with deliberations at the central bank. A stronger yen reduces the value of overseas income at Japanese companies.
''The strengthening of the yen has added to pressure on the BOJ to implement more reflationary policy,'' said Mitul Kotecha, Hong Kong-based global head of foreign-exchange strategy at Credit Agricole. ''The risk is for a shift higher in dollar-yen in coming sessions from oversold levels.''