By Patrick Rial Oct. 17 (Bloomberg) -- Asian stocks rose, led by financial companies and utilities, after money market rates fell as governments stepped up efforts to unlock credit markets. Mitsubishi UFJ Financial Group Inc. added 2.6 percent and Westfield Group, the world's biggest shopping center owner by market value, jumped 5.1 percent. The benchmark MSCI Asia Pacific Index is set for its first weekly climb since August as easing credit countered concern the world's economy is heading for a recession. Singapore and Malaysia said yesterday they will guarantee deposits, following Hong Kong, Indonesia, Australia and New Zealand. Tokyo Electric Power Co. rallied 8.8 percent as oil prices traded at half their July record. MSCI's Asian index added 1.4 percent to 88.11 as of 3:17 p.m. in Tokyo. Financial and utilities stocks accounted for about two- fifths of the gains. The index, having posted its biggest-ever advance and decline in the past three days, is set to rise 2.5 percent this week. ``The focus is on what the next policy response will be and the movements of the short-term money markets,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo. ``Long-term investors are sitting on the sidelines waiting out this period.'' Standard & Poor's 500 Index futures added 0.5 percent. Japan's Nikkei 225 Stock Average climbed 2.8 percent to 8,693.82 the region's biggest advance and completing a 5 percent weekly gain. Nippon Telegraph & Telephone Corp. soared after Nikko Citigroup Ltd. advised investors buy the shares. China's CSI 300 Index rose 0.5 percent. Citic Securities Co. led the nation's brokerages higher on speculation they may be allowed to offer loans for stock purchases. South Korea's Kospi Index dropped 2.7 percent, led by KB Financial Group Inc., amid growing concern the nation's banks may struggle to refinance debt. Share Valuations MSCI's Asian index tumbled 31 percent in the previous six weeks as credit markets seized up, economies slowed and companies failed, making the region's equities their cheapest ever. Shares on the index traded at 9.76 times earnings yesterday, near a record low reached on Oct. 10. Stocks rallied earlier this week after central bankers pledged $2 trillion to rescue financial companies and governments guaranteed bank deposits. ``Valuations at the moment are pretty reasonable. What I am worried about is that earnings will have to be downgraded,'' said Hans Goetti, who oversees $10 billion in Asia as chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd. ``When you have an oversold situation, you can buy almost anything because it's a snap-back rally.'' U.S. Gains The S&P 500 advanced 4.3 percent yesterday, reversing a drop of 4.6 percent as speculation bond insurers will be bailed out and a retreat in oil prices fueled gains. Mitsubishi UFJ, Japan's largest listed bank, added 2.6 percent to 760 yen. Westfield rose 5.1 percent to A$16.65. Hong Kong developer Hang Lung Properties Ltd. added 5 percent to HK$16.50. Hong Kong's three-month interbank offered rate for local dollar loans slid 0.15 percentage point to 4.2 percent, the biggest drop since Sept. 26. The rate Australian banks charge each other for three-month loans fell to 5.66 percent from 6.20 percent a week ago. Perceived default risk in the region also slipped, with the Markit iTraxx Japan index of credit-default swaps down 7 basis points to 200 at 9:04 a.m. in Tokyo, while a gauge for Australia slumped 12.5 basis points. Tokyo Electric, Asia's largest power producer, climbed 8.8 percent to 2,585. Kansai Electric Power Co. gained 8.4 percent to 2,250 yen. Both companies use heavy oil in some of their plants. Crude Oil Crude oil fell for November deliver dropped below $70 a barrel to as low as $68.57 in New York yesterday, bringing its plunge from a July peak to more than 50 percent. The contract rose 3.7 percent in after-hours trading to $72.43 amid speculation oil-producing nations will cut production. NTT, Japan's former telephone monopoly, surged 9.8 percent to 425,000 yen, the steepest climb since May 14. KDDI Corp., the nation's second largest mobile-phone operator, rose 7.1 percent to 545,000 yen. Nikko Citigroup raised its rating on the stocks to ``buy'' from ``hold,'' saying the telecommunications companies were attractive as a ``defensive'' industry amid the deteriorating economic outlook. KB Financial, which controls South Korea's largest bank, tumbled 12 percent to 38,000 won. Woori Finance Holdings Co., which controls Woori Bank, lost 10 percent to 9,950, the lowest since June 2005. Standard & Poor's said this week it may cut its credit rating on Kookmin Bank and six other lenders. Support Measures South Korea should consider guaranteeing banks' debts to help them overcome difficulties obtaining overseas funding and bolster confidence in the financial system, Kwon Jae Min, an S&P credit analyst said today. The won rose, rebounding from yesterday's biggest drop in a decade. The Korean currency advanced 2 percent to 1,345 per dollar at 1:13 p.m. Commodity producers and shipping lines slumped as a rout in metal prices and freight costs continued. BHP Billiton Ltd., the world's largest mining company, declined 4.7 percent to A$24.59, brings its slump from a May 19 peak to 50 percent. Neptune Orient Lines Ltd., Southeast Asia's largest shipping company, lost 5.6 percent to S$1.53. Copper fell to the lowest since 2006, while platinum declined to a level not seen since 2005. The Baltic Dry Index, a measure of shipping costs for commodities, lost 6.8 percent, a ninth day of declines. Hitachi Ltd., Japan's largest maker of electronics, dropped 3.2 percent to 537 yen after Goldman, Sachs & Co. lowered the shares to ``sell'' on the view that the company's earnings will miss analyst estimates and its subsidiaries are likely to cut profit forecasts. Iceland Exposure Cathay Financial Holding Co., Taiwan's biggest financial services company, lost 3.5 percent to NT$36.15. Fubon Financial Holding Co., Taiwan's second-largest publicly-listed financial services company by market value, dropped 3.3 percent to NT$17.85. Taiwan's banks hold as much as NT$10 billion ($307 million) of investments linked to securities in Iceland, the Commercial Times reported today, citing the financial regulator. Citic, the brokerage unit of China's biggest investment company, advanced 1.8 percent to 18.61 yuan. Haitong Securities Co., the country's largest listed brokerage by market value, rose 3.3 percent to 18.78 yuan. Citic and Haitong are among four brokerages that may be allowed by China's government to offer margin trading, an official with knowledge of the matter said. The pilot program will start as early as mid-November, said the official. Tenaga Nasional Bhd., Malaysia's biggest power producer, fell 1.5 percent to 6.50 ringgit after reporting its first quarterly loss in more than four years. To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

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