By Shani Raja and Akiko Ikeda Aug. 27 (Bloomberg) -- Asian stocks gained and the yen weakened as Japan’s government pledged to take action to curb currency gains that have eroded export earnings. The MSCI Asia Pacific Index rose 0.3 percent to 116.91 as of 1:19 p.m. in Hong Kong, reversing an earlier loss of as much as 0.4 percent. Futures on the S&P 500 index climbed 0.4 percent, while those on the Euro Stoxx 50 fell 0.4 percent, South Korea’s won slid and bond risk rose on speculation the U.S. government will cut its estimate for second-quarter expansion today and Federal Reserve Chairman Ben S. Bernanke will express concern over the outlook in a speech today. Japan’s Prime Minister Naoto Kan will speak today on his policies to fight deflation and curb the yen’s strength. His economic ministers will meet to discuss the policies, including strengthening ties with the Bank of Japan, Chief Cabinet Secretary Yoshito Sengoku told reporters in Tokyo. “Japan’s policy makers need to do something to show the market their resolve on the yen,” said Marito Ueda, senior marketing director at FXPrime Corp., a foreign-exchange margin company in Tokyo. “There’s a lot more they can do such as monetary easing.” The Nikkei 225 stock average closed up 1 percent, reversing an earlier loss of 1.1 percent. Nissan Motor Co., Japan’s third- largest automaker, climbed 3.2 percent. Canon Inc., which makes 78 percent of its sales outside Japan, rose 0.9 percent, erasing a loss of as much as 2.5 percent. Canon may review prices for its products and shift manufacturing overseas if the yen continues to strengthen, Masaya Maeda, who heads Canon’s camera business, told reporters in Tokyo today. Protecting Earnings Fairfax Media Ltd., Australia’s second-largest newspaper publisher, jumped 4.8 percent in Sydney and Industrial & Commercial Bank of China Ltd. climbed 1.6 percent in Hong Kong after earnings beat forecasts. “Earnings across the region have been pretty buoyant,” said Tim Schroeders, who helps manage about $1.1. billion at Pengana Capital Ltd. in Melbourne. “The continued strengthening of the yen has definitely been a cause of concern for a lot of people, and it appears things are moving closer to some sort of intervention.” The yen weakened to 107.83 per euro in Tokyo from 107.39 in New York yesterday, after rising to as high as 106.99. Japan’s currency dropped to 84.73 per dollar from 84.45. Kan’s administration is compiling an aid package to bolster growth as the currency’s 10 percent gain against the dollar this year hurts exports. The government is putting pressure on the Bank of Japan to jump start the economy. Alarm Bells The dollar was little changed at 1.0240 Swiss francs, set for a 1 percent loss this week. The greenback was at $1.2713 per euro from $1.2716. A U.S. report today will show gross domestic product grew 1.4 percent in the second quarter, versus the 2.4 percent pace the government estimated last month, according to a Bloomberg News survey of economists. Bernanke will discuss the outlook for the economy and policy responses tomorrow at the central bank’s annual symposium in Jackson Hole, Wyoming. The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit- default swaps. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan climbed 2 basis points to 133 basis points, Royal Bank of Scotland Group Plc prices show. That’s the highest since July 7, according to CMA in New York. Signals from U.S. economic data are “alarming” and the recovery has lost momentum, Mohamed A. El-Erian, Pacific Investment Management Co.’s chief executive officer, wrote in an opinion piece in the Washington Post. U.S. unemployment is high, consumer credit is shrinking and small companies are having trouble obtaining bank lines of credit, wrote El-Erian, who is also co-chief investment officer at Pimco, which runs the world’s largest bond fund. Won Declines The won slid 0.6 percent to 1,196.8 per dollar as overseas investors sold $143 million more of South Korean shares than they bought. “There’s a lot of uncertainty being imported from the U.S., and the picture remains one of nervousness on the potential impact of the U.S. slowdown on Asia,” said Robert Minikin, a senior foreign-exchange strategist at Standard Chartered Plc in Hong Kong. “We are looking for an even weaker-than-consensus U.S. GDP number tonight.” Among declining stocks, Newcrest Mining Ltd., Australia’s biggest gold mining company, dropped 1.9 percent. BHP Billiton Ltd., the world largest mining company, fell 0.2 percent. Rio Tinto Ltd., the third largest, declined 0.4 percent. Investors took $7.1 billion from global equity funds in the week to Aug. 25, including $289 million from Asia ex-Japan stock funds, Cambridge, Massachusetts-based research firm EPFR Global said in an e-mail. “The recovery was always going to be choppy and slow,” said Jason Teh, who helps manage $2.6 billion at Investors Mutual Ltd. in Sydney. “But the market’s anticipation of a strong recovery obviously isn’t coming to fruition. There are questions out there about a double-dip recession.” To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

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