Asian Stocks Swing Between Gains, Losses on Japan Budget, Factory Restart

Asian stocks swung between gains and losses as Japanese chip and automakers rose as a key supplier started production. Japan’s bond futures climbed as Prime Minister Naoto Kan compiled an extra budget to fund reconstruction from the country’s worst earthquake without selling more debt.

The MSCI Asia Pacific Index was little changed at 138.79 at 2:07 p.m. in Tokyo, after earlier falling as much as 0.4 percent. Renesas Electronics Corp., a chipmaker which supplies the country’s carmakers, jumped 2.3 percent after saying it will restart operations at a quake-halted plant.

Toyota Motor Corp., the world’s biggest carmaker, rose 3 percent. Gold for immediate delivery rose to a record, while spot silver was little changed, trading near its 31-year high. Rubber rose as much as 3.1 percent in Tokyo.

“It’s a difficult environment for investors to take a proactive stance right now,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “There are still a lot of uncertainties for the global economy.”

About as many shares rose as fell on the MSCI Asia Pacific Index, which is on course for a 2.2 percent gain this week, reversing last week’s declines.

Japan’s Nikkei 225 Stock Average rose 0.3 percent, reversing an earlier decline of as much as 0.8 percent. China’s Shanghai Stock Exchange Composite Index retreated 0.2 percent. Taiwan’s Taiex index climbed 0.1 percent. South Korea’s Kospi Index slid 0.1 percent.

Market Holiday Closures

Markets in Australia, New Zealand, Singapore, Hong Kong, Indonesia, India and the Philippines are closed for a holiday.

The MSCI Asia Pacific Index gained 0.8 percent this year through yesterday, compared with gains of 6.3 percent by the S&P 500 and of 1.7 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.3 times estimated earnings on average as of the last close, compared with 13.7 times for the S&P 500 and 11.3 times for the Stoxx 600.

Chipmakers and car manufacturers were the biggest boosts to Japan’s Nikkei 225 Stock Average, and consumer discretionary shares, which include Toyota and Honda Motor Co. as its members, advanced 0.7 percent, the biggest gain among the 10 industry groups on the MSCI Asia Pacific Index.

Renesas Electronics advanced 1.1 percent in Tokyo, reversing an earlier decline of as much as 3.1 percent, after announcing plans to restart operations at its quake-halted Naka plant in Ibaraki prefecture. Toyota jumped 3 percent, the biggest positive support to the MSCI Asia Pacific Index. Honda rose 2.1 percent and Nissan Motor Co. gained 3.5 percent. All three carmakers reversed earlier declines.

‘Good News’

“Renesas’ production restart is good news for the market,” said Tsutomu Yamada, a market analyst at Kabu.com Securities Co. in Tokyo. “It’s good for semiconductors and also for carmakers. Investors are looking forward to the supply chain getting back to normal.”

Also in Tokyo, Advantest Corp., the world’s biggest maker of memory-chip testers, rose 1.5 percent in Tokyo after the Nikkei newspaper said the company’s operating profit may have gained. Yaskawa Electric Corp. jumped 7.2 percent after Credit Suisse Group AG boosted its investment rating on the motor maker.

Japanese bonds rose, sending 10-year yields to a four-week low, on prospects the first spending package for rebuilding from last month’s record earthquake may not worsen the nation’s debt burden after saying it won’t issue new bonds.

Bond Yields Fall

Ten-year yields reached the lowest in four weeks on prospects that the first spending package for rebuilding from last month’s record earthquake and tsunami may not worsen the nation’s debt burden.

The yield on the 1.3 percent bond due March 2021 fell one basis point to 1.22 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker, the lowest since March 25. A basis point is 0.01 of a percentage point.

“People are finding it favorable that policy makers are at least talking about tax increases and trying to respect” fiscal discipline, said Shinichi Horikawa, who helps to manage the equivalent of $12 billion at Mitsui Sumitomo Kirameki Life Insurance Co.

Treasuries in the U.S. rose for a second week as investors speculated that efforts to cut the Federal budget deficit may damp economic growth and awaited a policy statement next week from the Federal Reserve.

Two-year note yields dropped three basis points, or 0.03 percentage point, to 0.66 percent in New York, from 0.69 percent on April 15, according to Bloomberg Bond Trader prices.

“You are looking at an economy that’s just getting off low levels,” said David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors. “The market is looking for guidance from the FOMC. We’re looking for clues as to when the Fed may possibly begin to change course with respect to monetary policy.”