Asian stocks rise, yen falls

Australian shares rose to their highest level in a year as M&A activity overseas on Monday, including Xerox Corp’s biggest acquisition ever, was seen catching on globally.

“M&A activity is coming, we’re told. It’s difficult to pin down but there’s going to be more in the resources sector," said Bill Bishop, a private client adviser at RBS Morgan in Australia.

In Japan, the yen’s retreat from an eight-month high hit on Monday helped shares of Japanese exporters, lifting the Nikkei average by 0.9%.

Japan’s currency came under pressure after finance minister Hirohisa Fujii said that intervention might be an option if currency moves were irregular, although he reiterated it was wrong for any country to try to win a competitive edge by devaluing its currency.

The yen slid to as low as ¥90.23 to the dollar after his comments, further pulling back from ¥88.22 hit on Monday, its highest level since January. Tokyo has not intervened in the market since March 2004 and analysts do not expect such a move anytime soon.

“Fujii appears to have been jolted by the yen’s rapid appreciation and is worried that the strong yen would throw cold water on the economic recovery led by exports. But it is unlikely the government actually will intervene in the market," said Takumi Tsunoda, an economist at Shinkin Central Bank Research Institute in Tokyo.

A record drop in consumer prices last month highlighted that Japanese domestic demand is still weak and limited losses in Japanese government bond futures, which dipped as stocks gained.

December 10-year JGB futures were down 0.02 point at 139.29.

AUSSIE DOLLAR SHINES

The MSCI index of Asia Pacific stocks traded outside Japan rallied close to 2%, and is now up nearly 60% this year.

Technology shares drew buying, notably in Taiwan where they traded on news that Taipei will allow contract chipmakers and flat-panel makers to acquire rivals in China, although analysts said it would be some time before the policy was implemented.

Taiwan Semiconductor Manufacturing Co Ltd and UMC, the world’s two largest contract chip makers, rallied 4.9% and 3.6%, respectively, lifting the broader TAIEX index by 2%.

Hong Kong shares rebounded from a three-week low with the Hang Seng index rising 2.1% for its biggest one-day percentage gain in more than a week.

Shares in Australia rose 1.6%, followed by Singapore’s 1.3% jump, while India and Korea notched gains of just under a percent.

China shares bucked the regional uptrend, with the Shanghai Composite index dipping 0.3%.

Recently listed newcomers were actively traded, even as investor sentiment remained depressed by heavy supplies of new shares, including initial public offerings on China’s planned Nasdaq-style second board, ChiNext.

“Investors are worried that new share supply ... will continue diverting funds from existing shares," said Gui Haoming, head of research at Shenyin and Wanguo Securities.

The Australian dollar got a lift after a senior central banker warned of a potential housing bubble, adding to expectations of an interest rate rise soon. A central bank watcher said the Reserve Bank of Australia was almost certain to raise interest rates by 25 basis points each in November and December although he did not cite any sources.

The Australian dollar was trading at $0.8742, not far off its 13-month high of $0.8790 set last week.

Robust equity markets and geopolitical tensions sparked by Iranian missile tests this week pushed oil prices up to above $67 a barrel at one point in Asian trade, extending a more than 1% gain on Monday.

Gold edged up to $992.20 an ounce but traders said investors were cautious, saying bullion may be due a slight correction.

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