Debt resolution in sight across the board gains in Asian markets

Asian stocks firmed on news of a bipartisan deal to lift the US debt ceiling before the looming deadline. The MSCI Asia Pacific Index added 1.6% as of 1:55 p.m. in Tokyo, set for the biggest gain since May 26. Standard & Poor’s 500 futures climbed 1.5%, indicating the gauge will rebound from three straight monthly losses. Japan’s Nikkei 225 Stock Average increased 1.9%, South Korea’s Kospi index jumped 1.8%, and Australia’s S&P/ASX 200 Index climbed 1.9%.

In economic news, South Korea’s inflation grew to a four-month high and breached the central bank’s target for a seventh straight month in July, in turn bolstering the case for another interest rate increase this month. Consumer prices rose 4.7% from a year earlier, after a 4.4% gain in June. The Bank of Korea’s board will meet on Aug. 11 to discuss whether to raise borrowing costs after reports last month showed that economic growth slowed on weaker exports. Policy makers across Asia are struggling to contain rising consumer prices as food costs soar.

In China, the Purchasing Managers’ Index was at 50.7 for July compared with 50.9 in June, the China Federation of Logistics and Purchasing said in a statement today. The reading beat most market expectations which were forecasting a larger fall. A separate manufacturing index for China released today by HSBC Holdings Plc and Markit Economics fell to 49.3 for July from 50.1 in June.

In Australia, Macarthur Coal rose 1.5% after saying those seeking to acquire the company advised that they intend to make an offer for a controlling stake in the Australian coal producer. In Tokyo, Mitsubishi UFJ rallied 5.4% after Japan’s biggest publicly traded bank said first-quarter profit tripled to a record. Elsewhere, Nomura Holdings and Daiwa Securities, Japan’s largest brokerages, plan to cut costs as the faltering local economy, Europe’s sovereign credit crisis and U.S. debt impasse weigh on earnings.