Asian stocks rise as US bank bill fears ease

G-20 leaders meeting in Toronto left room to move at their own pace and adopt tailored policies, trying to balance contrasting priorities by pledging to halve budget deficits by 2013 without stunting growth.

The heads of the G-20 rich and developing nations also promised to clamp down on risky behaviour by banks without restricting lending.

That followed an historic overhaul of financial regulations by US lawmakers on Friday, with banks forced to spin off swap trading operations. Banks will be able to keep most of their books but will be barred from commodity, equity and some credit default swaps.

“I don’t see much substance from G-20," said Lin Yuhui, deputy general manager of Jinhui Futures.

“Basically it’s saying everyone is back to mind their own business, just like before the crisis. The financial regulation may have some impact on the metals market in the future -- it may cut down speculation," Lin said.

The MSCI index of Asia Pacific shares outside Japan rose 0.8%. Hong Kong stocks led the way, rising 0.4%

In Tokyo, the Nikkei share average fell 0.3% to 9,705.08, extending falls after closing last week below a key support level and booking its biggest weekly loss in a month with an indecisive outcome looming in an upper house poll next month.

A muted reaction to the G-20 meeting didn’t help, with the Japanese market slipping across the board.

Wall Street had finished almost unchanged on Friday, although financial stocks had gained on relief the U.S. financial regulation bill would not inhibit Wall Street profits as much as had been feared.

Underlining the less-than-decisive conclusion to the G-20 summit, Angel Gurria, head of the Organisation for Economic Co-operation and Development, said the “incipient recovery" offered policy choices but also made it harder to find common ground.

“When the house was on fire, we all knew what to do: get a hose," Gurria told G-20 leaders.

China mutes yuan talk

Signalling the difficulties groups such as the G-20 have in addressing matters crucial global economic balances, China succeeded in having a line about its decision to move towards a more flexible exchange rate removed from the G-20 communique.

Beijing maintains debate about the yuan has no place in international forums.

The People’s Bank of China set the yuan’s daily mid-point at 6.7890 against the dollar on Monday, a new post-2005 revaluation high.

The yuan has risen nearly 0.5% in the last week since the PBOC said on June 19 that it was unshackling the currency from its two-year-old peg to the dollar, but gains have been kept in check by big state-owned banks.

In Japan, retail sales in May rose 2.8% from a year earlier, their slowest annual pace since January, in a sign that consumption driven by government stimulus spending may be losing momentum.

Retail sales had been surging since the start of the year, helped by government subsidies for purchases of cars, electronics and other durable goods.

Investors seeking to cut long positions in favour of the greenback had the dollar on the defensive on Monday. The euro held gains as the focus shifted to the sustainability of a US recovery from euro zone debt worries.

The dollar index was at 85.31, holding above last week’s low of 85.09. The dollar hovered near a five-week trough against the yen after data released on Friday showed U.S. gross domestic product in the first quarter grew more slowly than expected.

“I have a feeling in my bones that perhaps Friday was the start of the marjket questioning the viability of the U.S. as the safe haven," said Tim Lovell, an economist at ICAP in Sydney. Higher commodities and the subdued U.S. dollar helped the Australian and New dollars. The Australian dollar held firm at around $0.8757 and was up 0.2% against the yen at 78.24. Oil rose to its highest in close to eight weeks on Monday at $79 as tropical storm Alex forced Mexico to reduce oil exports and some US producers to evacuate platforms and curb output.

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