By Chua Kong Ho and Shani Raja Dec. 3 (Bloomberg) -- Asian stocks rose for the first time in three days as central banks stepped up efforts to ease the credit crisis and on signs of a revival in merger activity. Westpac Banking Corp. gained 3.7 percent in Sydney after the Federal Reserve extended an emergency loan program and the Bank of Japan eased lending terms for banks. Qantas Airways Ltd. climbed 4.4 percent after confirming merger talks with British Airways Plc. GST Holdings Ltd., a Chinese fire-alarm maker, surged 35 percent in Hong Kong after a takeover bid. China Mobile Ltd. led phone stocks higher on speculation the government may award third-generation licenses. “It’s just a question of time” before government stimulus measures start to take effect, said Jason Teh, who helps manage about $5.7 billion at Investors Mutual Ltd. in Sydney. “Mergers make sense in that you can extract the same revenues from a lower cost base.” The MSCI Asia Pacific Index gained 0.8 percent to 79.56 as of 2:22 p.m. in Tokyo, with five stocks climbing for every three that declined. The measure dropped 4.5 percent yesterday, the most since Nov. 20. The gauge has lost 49 percent this year, and trades at an average of 1.06 times book value, compared with as high as 2.6 times last year. Japan’s Nikkei 225 Stock Average rallied 1.2 percent to 7,955.08 as the Bank of Japan said it will accept lower-grade corporate debt as collateral for loans. Seven & I Holdings Co., the country’s largest retailer, surged after Macquarie Group Ltd. upgraded the stock. Global Recession Thailand’s SET Index advanced 2.6 percent after protestors ended their eight-day blockade of the country’s main international airport following the removal of Prime Minister Somchai Wongsawat. Most other markets in Asia rallied. Air China Ltd. and Tokyo Electric Power Co. advanced amid optimism costs will drop as oil traded below $50 a barrel for a third day. Futures on the Standard & Poor’s 500 Index lost 0.8 percent today. The gauge rallied 4 percent yesterday as the Fed extended terms of emergency loan programs to ease the credit crisis. The move followed an interest rate cut by Australia’s central bank and the Bank of Japan’s pledge. Vietnam’s central bank also lowered interest rates for the fourth time in six weeks yesterday. Stocks have fallen this year as the collapse of the U.S. mortgage market sparked financial turmoil that pushed the world’s biggest economies into recession. The U.S. first entered a recession in December 2007, the panel of economists that dates American business cycles said Dec. 1. Bond Risk Australia’s economy grew at the weakest pace in eight years last quarter, a government report showed today. Westpac, the country’s biggest bank by market value, rose 2.5 percent to A$16.50. The lender cut its home-loan rates following yesterday’s rate reduction by the Reserve Bank of Australia. Financial stocks also gained after the cost to protect Asian bonds from default declined. The Markit iTraxx Asia credit-default swap of 50 investment-grade borrowers outside Japan fell 20 basis points to 405. The region’s benchmark for high-risk, high-yield borrowers dropped 50 basis points to 1,150, according to Barclays Plc. Mizuho Financial Group Inc., which has the most writedowns and credit losses among Asian banks, added 2.1 percent to 233,000 yen. Woori Investment & Securities Co. climbed 7.6 percent to 12,050 won in Seoul. An index of financial stocks on MSCI’s Asian index trades at 0.97 times book value, about half the 2.02 times at the start of the year. ‘Good Value’ “We’re starting to see good value appear in some of Asia’s banks,” said Robert Rountree, Singapore-based head of investment marketing at Prudential Asset Management, which oversees about $40 billion in assets. His firm favors consumer and infrastructure stocks that will benefit from government spending programs, he said. Qantas gained 4.4 percent to A$2.35. Chief Executive Alan Joyce wants to combine with British Airways to cut costs amid mounting losses for the airline industry. The two airlines currently have an alliance on flights between Australia and Europe which allows them to fix prices and services on what is known as the “kangaroo route.” GST surged 35 percent to HK$2.57, after United Technologies offered to buy the remaining shares it doesn’t already own for HK$1.9 billion ($245 million). The stock resumed trading today after being suspended since Nov. 10. China Construction Bank Corp. gained 2.2 percent to HK$4.19 after China’s $200 billion sovereign wealth fund increased its stake in the lender. Fuel Costs Seven & I gained 9.8 percent to 2,755 yen, the most since Nov. 4. Macquarie Group raised its stock recommendation to “outperform” from “neutral,” saying the retailer is benefiting from increased daily food sales as a worsening economy prompted consumers to opt for boxed lunches over dining out. ABC-Mart Inc., a Tokyo-based shoe retailer, climbed 6.3 percent to 3,560 yen. The company yesterday said same-store sales rose 6.6 percent in November from a year earlier, the biggest gain since August when they rose 16 percent. Air China jumped 3.2 percent to HK$1.96 in Hong Kong. Fuel accounted for more than 40 percent of operating costs this year. Singapore Airlines Ltd., which saw quarterly profit slump 36 percent on higher fuel expenses, added 2.1 percent to S$10.50. Tokyo Electric gained 3.7 percent to 2,965 yen. A $1 change in a barrel of crude alters Tokyo Electric’s annual fuel costs by 18 billion yen ($193 million). Kansai Electric Power Co., Japan’s second-biggest utility, added 1.9 percent to 2,625 yen. Declining Auto Sales Oil futures in New York fell 4.7 percent yesterday to $46.96 a barrel, the lowest since May 20, 2005. Prices were at $47.88 in after-hours trading. In Sydney, Rio Tinto Group tumbled 5.9 percent to A$36.69. The company said it’s reassessing expenditure and the review may affect some exploration projects. ABN Amro Holding NV lowered its 2009 profit estimate for the company by 36 percent to $9.5 billion, citing declines in iron ore and coal prices. Toyota Motor Corp., Japan’s largest automaker, fell 1.8 percent to 2,775 yen, after November U.S. sales plunged 34 percent for the biggest monthly decline since at least 1980. Honda Motor Co., the No. 2 carmaker, slumped 5.7 percent to 1,778 yen after U.S. sales last month dropped 32 percent. China Mobile climbed 2.8 percent to HK$72.30. State radio said the country will invest a total of 800 billion yuan ($116 billion) to provide 3G mobile services, and issue three licenses by the end of the year, without giving more details. To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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