Consumer spending sparks optimism

By Chua Kong Ho  |   2008-6-27  |     NEWSPAPER EDITION

ASIAN stocks rose for the first time in six days, led by electronics makers and banks, on optimism about export growth after the US Federal Reserve reported an improvement in consumer spending in the world's largest economy.

Sony Corp, which gets 27 percent of sales from the US, gained the most in three weeks in Tokyo, and Nintendo Co, maker of the Wii video-game system, climbed to a five-month high.

Commonwealth Bank of Australia, the country's second-biggest by assets, rose after saying it has no need to raise additional capital. Stocks pared gains after Goldman, Sachs & Co downgraded brokerages and said Citigroup Inc may need more funds.

"Like the Fed's comments suggest, the situation is certainly getting better than when major investment banks were collapsing," Christian Jin, who oversees US$1.3 billion as head of global investment at CJ Asset Management Co in Seoul, told Bloomberg News.

The MSCI Asia Pacific Index rose 0.4 percent to 138.72 in Tokyo. About as many stocks advanced as fell, with financial stocks contributing the most to the index's advance among 10 industry groups.

Most Asian benchmark indexes climbed. Japan's Nikkei 225 Stock Average was little changed at 13,822.32, paring an increase of as much as 0.9 percent, after Goldman said Citigroup may take an additional US$8.9 billion in net writedowns in the second quarter. The broker also cut its rating on US brokerages to "neutral" from "attractive."

Australia's S&P/ASX 200 Index rose 1.3 percent, the region's biggest advance. Centro Properties Group and Babcock & Brown Ltd gained after newspaper reports said they will cut debt levels.

MSCI's Asian index has tumbled 12 percent year-to-date, its worst performance since 1998, on concern quickening inflation, record oil prices and almost US$400 billion of credit-related losses by the world's largest banks will hurt growth.

Futures on the US Standard & Poor's 500 Index fell 0.4 percent. The measure had its biggest gain in two weeks on Wednesday after the Fed left its benchmark rate at 2 percent and said consumer spending is "firming" while acknowledging that rising energy prices will be a curb on growth into 2009.

Traders trimmed bets on a rate increase in the next three months after the announcement. Odds that the Fed will keep its benchmark at 2 percent in September jumped to 66 percent from 10 percent a day earlier, according to futures contracts quoted on the Chicago Board of Trade.

Sony, the world's second-largest consumer-electronics maker, gained 2.9 percent to 5,060 yen.