Asian shares up on regulators' reassurance

Most Asian stocks advanced, led by South Korean banks as regulators said risks are being controlled. Japanese and Australian shares declined after Toyota Motor Corp’s debt rating was cut and BHP Billiton dropped a bid for Rio Tinto Group.

Woori Finance Holdings surged 15 per cent in Seoul. Toyota lost 4.6 per cent after Fitch Ratings lowered the world’s second-largest automaker’s debt to AA. Rio Tinto Group slumped 34 per cent after BHP Billiton abandoned its $66 billion takeover attempt for the rival mining company.

“Companies that have kept their balance sheets in order and have stronger business models will get through this better,” said Hugh Dive, who helps manage about $3 billion at Sydney- based Investors Mutual.

Most benchmark indexes in Asia gained, led by South Korea’s Kospi, which climbed 4.7 per cent to 1,029.78. Japan’s Nikkei 225 Stock Average dropped 1.3 per cent to 8,213.22 on the lightest trading day of the year in terms of value. Australia’s S&P/ASX 200 Index slid 2.3 per cent.

The MSCI Asia Pacific Index lost 0.1 per cent to 79.97 at 9:34 pm in Tokyo, with almost five stocks rising for every four that fell. The gauge briefly rose on Wednesday after China slashed its key lending rate by the most in 11 years. The cut came after most major markets closed, including Hong Kong and China.

Thailand’s SET Index added 0.9 per cent, reversing a slump of as much as 3 per cent, as government, business and military leaders met to resolve the occupation of Bangkok’s international airport by anti-government protesters. About 3,000 tourists were evacuated after the seizure forced the airport to shut.

US stocks advanced for a third day yesterday as the Federal Reserve committed an additional $800 billion to unlocking credit markets. The Standard & Poor’s 500 Index swung between gains and losses more than 20 times before closing 0.7 per cent higher. Futures on the index lost 0.8 per cent on Wednesday.

The Fed said yesterday it will purchase as much as $600 billion of debt issued or backed by government-chartered housing-finance companies and establish a $200 billion program to shore up consumer and small-business loans.

More than half of stocks in Asia have sunk below their book value as the collapse of the US housing market curbed consumer spending on Asian-made goods and reduced demand for fuel and other commodities. MSCI’s Asian index has tumbled by 49 per cent this year as the global economy slipped into recession.

The Organization for Economic Cooperation and Development cut its 2009 growth forecast for its 30 members yesterday to a 0.4 per cent contraction, from a previous estimate of 0.3 per cent, and called on governments to use financial and monetary policy to ease the worst recession since the early 1980s.