Merger talk spurs Asian stocks

Asian shares continued their two day winning streak thanks to more positive offshore leads. The MSCI Asia Pacific Index rose 0.6% at 12:50 p.m. in Tokyo. S&P 500 Index futures slid 0.4% after a three-day rebound in the U.S. stock gauge. Around two shares advanced for every one that declined on MSCI’s Asia Pacific Index, with the gauge bound for its highest close since Aug. 5.  China meanwhile boosted its holdings of U.S. government debt for a third straight month to US$1.17 trillion in June, while other foreign investors were sellers of Treasuries for the first time since 2009.

In regional stock markets, Japan’s Nikkei 225 Stock Average climbed 0.2%. The Kospi Index rallied 4% in South Korea, where markets were closed yesterday for a holiday. Indian markets also returned from a holiday, with the Bombay Stock Exchange Sensitive Index rising 0.9%. Hong Kong’s Hang Seng Index increased 0.3%. Australia’s S&P/ASX200 continued to trail its neighbors, down by 0.9% lead by falls in banking shares.

Australia’s national airliner Qantas Airways today announced its new international strategy with a focus on Asian routes. The airliner will form a Japanese budget carrier and an Asia-based full-service unit, while handing some Europe services to British Airways, it said in a statement today. Sydney-based Qantas will also order as many as 110 Airbus SAS A320s, including 78 of the revamped neo version. Qantas shares traded flat in Sydney.

In metals markets, Nickel for three-month delivery rose to US$21,600 a metric ton on the London Metal Exchange, halting a two-day retreat. Tin climbed 0.8% to US$24,650 a ton and aluminum increased 0.3% to US$2,383. In energy, Oil dropped from the highest in almost two weeks, with futures for September delivery sliding as much as 0.7% to US$87.23 a barrel. The contract yesterday gained 2.9% to US$87.88, the highest settlement since Aug. 3.

In regional currency markets, Malaysia’s ringgit advanced for a sixth day, the longest winning streak since April, on speculation policy makers will favor a stronger currency or raise interest rates to stem gains in living costs. Regional inflation was echoed last month by South Korea and India which have adjusted monetary policy accordingly. The Swiss franc climbed 0.1% to 78.33 centimes against the dollar, following a four- day decline while the Euro was steady at 1.4418 against the dollar ahead of the Sarkozy Merkel meeting tonight.