By Candice Zachariahs Dec. 10 (Bloomberg) -- The Australian and New Zealand dollars advanced as regional equities gained, prompting speculation investors will buy higher-yielding assets. The Australian dollar also rose as consumer confidence increased in December for a second month and home loan approvals in October gained for the first time in nine months. Gains in the Australian dollar may be limited before a report tomorrow that will show November unemployment rose to a one-year high. “Markets have shown themselves to be resilient,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp. “The risks are that we see further waves of bad news and not just in the U.S.” Gains in the Australian dollar towards 66.50 cents and in the New Zealand currency towards 55 cents are selling opportunities, Rennie said. Australia’s currency rose 1.3 percent to 66.39 U.S. cents as of 3:30 p.m. in Sydney from 65.54 cents late in Asia yesterday. The currency advanced 1.1 percent to 61.45 yen. New Zealand’s dollar gained 1.5 percent to 54.94 U.S. cents from 54.15 in Asia yesterday. It bought 50.84 yen from 50.19. A sentiment index in Australia jumped 7.5 percent to 92 points, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted between Dec. 1 and Dec. 7 and released today in Sydney. The index has since February held below 100, which indicates pessimists outnumber optimists. Home Loan Approvals The number of loans granted to build or buy homes and apartments in Australia rose 1.3 percent to 48,299 in October from the lowest level since 2001, the statistics bureau said in Sydney today. The median estimate of 21 economists surveyed by Bloomberg News was for a 1 percent gain. The Reserve Bank of Australia has slashed interest rates 300 basis points from early September in the most aggressive rate- cutting cycle since 1991 to boost spending as the economy slows. The unemployment rate is forecast to grow to 4.4 percent, the highest since November 2007, from 4.3 percent according to the median estimate of 22 economists surveyed by Bloomberg News. The statistics bureau will release the report at 11.30 a.m. “Recent aggressive interest rate cuts by the RBA, together with the government’s increased first-home owners’ grant should continue to provide some support to housing finance in the coming months,” wrote Sydney-based Jo Heffernan and Amanda Tan, economists at St George Bank Ltd. in a research note. Benchmark interest rates are 4.25 percent in Australia and 5 percent in New Zealand, compared with 0.3 percent in Japan and 1 percent in the U.S., attracting investors to the South Pacific nations’ assets. The risk in such trades is that currency market moves will erase profits. World Trade RBA Governor Glenn Stevens said yesterday that economic growth slowed “more quickly than anyone had forecast” in China, the nation’s biggest trading partner. World trade volumes will probably contract next year by 2.1 percent, hampered by exchange rate volatility, falling import demand and a decline in export financing, the World Bank said yesterday in its annual Global Economic Prospects report. Export volumes in New Zealand decreased 2.3 percent in the third quarter as dairy shipments slumped to a four-year low, Statistics New Zealand said in Wellington today. Demand from countries including China and India spurred a boom in commodities, which make up 60 percent of Australia’s exports and 70 percent of New Zealand’s overseas shipments. RBC Capital Markets revised its forecast for the Australian dollar, saying the currency will reach a low point of 55 U.S. cents in mid-2009, after previously forecasting it would bottom at 60 cents. New Zealand’s currency will reach a trough at 43 cents, wrote Sydney-based Sue Trinh, a senior currency strategist with RBC Capital Markets, in a research note yesterday. Australian government bonds declined. The yield on the 10- year note rose 9 basis points, or 0.08 percentage point, to 4.4 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.714, or A$7.14 per A$1,000 face amount, to 106.978. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.8 percent from 4.78 yesterday. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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