TOKYO, July 2 — Asian stocks rose, extending the regional index’s longest stretch of gains in more than two months, on signs the outlook for manufacturing in some of the world’s biggest economies is improving. The yen strengthened, while gold climbed a third day after last week’s rout.

The MSCI Asia Pacific Index advanced 0.9 per cent by 9.47am in Tokyo, rising for a fifth day and poised for the highest close since June 19 as Japanese equities climbed. The Topix Index jumped 0.9 per cent in Tokyo, while shares Australia rallied.

The yen added 0.1 per cent after retreating almost 2 per cent over the past three days, while Malaysia’s ringgit strengthened versus the dollar. Rubber futures climbed a fourth day and other precious metals followed gold higher. Standard & Poor’s 500 Index futures rose 0.2 per cent after the gauge climbed 0.5 per cent in New York.

Manufacturing data from the US, Japan and the UK yesterday bolstered prospects for a pickup in global growth, offsetting concerns over China, where factory output declined last month. The Institute for Supply Management’s New York factory index is due today and Australia’s central bank will probably keep interest rates at a record low, according to the median of economists’ estimates compiled by Bloomberg.

“Economic fundamentals in most areas have been improving,” Angus Gluskie, managing director at White Funds Management Ltd. in Sydney, where he manages about US$450 million (RM1.4 billion), said by phone.

“Markets have some potential to pick up from here. There’s still a degree of nervousness out there as we’re at the juncture when the Federal Reserve is signaling it may reduce stimulus measures. There’s also a clear change of policy direction in China.”

Factory Data

More than US$2.6 trillion was erased from the value of global equities last month amid speculation the Federal Reserve will curb asset purchases this year should risks to the US economy continue to abate.

US government securities handed investors a loss of 2.5 per cent in the first six months of 2013, according to Bank of America Merrill Lynch data, the biggest decline since the first half of 2009.

The ISM’s US factory index increased to a three-month high and exceeded the median economist estimate in June after Japan’s Tankan report signaled that manufacturers in the Asian nation were optimistic for the first time since 2011.

UK manufacturing grew at the fastest pace in two years last month and euro-area output contracted less than initially estimated, separate reports showed.

Chinese Outlook

Futures on Hong Kong’s Hang Seng Index fell 0.3 per cent today with trading resuming after a holiday. The Shanghai Composite Index of domestic Chinese equities advanced 0.8 per cent yesterday.

Two gauges of Chinese manufacturing retreated in June, data yesterday showed, as the world’s second largest economy grapples with a cash crunch amid a sustained slowdown.

Five of 12 sub- indexes usually released with the government PMI were absent from the release without explanation. The country’s one-day repo rate has fallen 838 basis points, or 8.38 per centage points, from a record-high 12.85 per cent reached June 20 as the People’s Bank of China injected funds.

The S&P/ASX 20 Index in Sydney soared 1.5 per cent, led by gains in raw materials companies and consumer stocks. New Zealand’s NZX 50 Index rose 0.7 per cent after falling 0.5 per cent yesterday. South Korea’s Kospi Index added 0.1 per cent.

Commodities and consumer-related companies also drove gains in the MSCI Asia Pacific measure, data compiled by Bloomberg show.

The yen strengthened to 99.58 per dollar, after posting its worst first half since 1982. Japan’s currency strengthened less than 0.1 per cent to 130.11 per euro, after weakening the past three days. Japanese 10-year bonds yielded 0.89 per cent, little changed from yesterday.

Ringgit, Aussie

The Dollar Index, which tracks the greenback against six major counterparts, fell 0.1 per cent to 82.99, slipping a second day. The ringgit added 0.2 per cent to 3.1569 per dollar.

Australia’s dollar was little changed at 92.45 US cents, after jumping 1.1 per cent yesterday, while 10-year government bond yields fell five basis points to 3.78 per cent.

The Reserve Bank of Australia will keep its cash target at a record-low 2.75 per cent today, according to the median of 28 economists’ estimates compiled by Bloomberg. The benchmark rate has been cut three times in the past year.

Crude oil rose 0.1 per cent to US$97.97 a barrel, extending yesterday’s 1.5 per cent jump and headed for the highest close since June 19. Gasoline futures due next month jumped 0.4 per cent after rising 0.8 per cent yesterday, and contracts on gas climbed 0.1 per cent, extending yesterday’s 0.3 per cent climb.

Earnings Season

Gold advanced for a third day, adding 0.4 per cent to US$1,257.15 an ounce, after sinking 23 per cent last quarter. Silver, platinum and palladium rose at least 0.2 per cent.

Copper futures slipped 0.1 per cent after surging 3.3 per cent yesterday. Contracts on rubber jumped 2.5 per cent.

The S&P 500 Index rebounded yesterday after losing 1.5 per cent in June, its first monthly decline since October. The benchmark US measure rallied 13 per cent in the first half of the year, the best performance since a 17 per cent gain in the first six months of 1998.

Alcoa Inc., the largest US aluminum supplier, will mark the unofficial start to the second-quarter US earnings season July 8 as the first Dow Jones Industrial Average company to report results. Per-share profit is forecast to have increased 2.4 per cent during the period, according to a Bloomberg survey of analysts June 28, led by a 20 per cent increase at financial firms. Earnings excluding financial companies are projected to have decreased 0.9 per cent in the period.

‘Sense of Optimism’

There is “a sense of optimism toward the second half,” Michael Weiner, chief investment officer at Unified Trust Co., in Lexington, Kentucky, said by phone yesterday. The wealth- management firm oversees more than US$3 billion in assets. “The market is beginning to think about second-quarter earnings and I think it wants to turn its attention away from the Fed-oriented things.”

US payrolls data is scheduled to be released July 5 and will show an increase of 165,000 workers for June, after gaining 175,000 in May, according to the median of 70 economists’ estimates surveyed by Bloomberg. This is the main report investors are anticipating this week, Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients today.

Bullish Bets

Japan’s Topix Index and the Nikkei 225 rose a fourth day. Japanese investors who trade stocks using borrowed money are the most bullish since 2000, signaling expectations the rally in equities will continue. The number of Japanese shares bought through margin accounts that profit when stocks rise outnumbered those that make money during declines by about 7 to 1, a ratio not seen for 13 years, data compiled by Bloomberg show.

MSCI’s Emerging Markets Index was little changed in early trading after climbing over the past five days.

The gauge of developing-nation stocks has rebounded 6.6 per cent from a one year-low reached June 24 and trades for 9.8 times estimated earnings, compared with a valuation of 13 for developed-country equities. The MSCI World Index has climbed 8.1 per cent this year, while the emerging-market measure has dropped 11 per cent. The World measure gained 0.2 per cent today.

Yields on Egypt’s benchmark dollar bonds due in April 2020 jumped to a record above 10 per cent after protesters demanded President Mohamed Mursi step down and the military said it may intervene. – Bloomberg