Asian markets recover slightly on optimism

Asian stocks snapped a four-day drop, the Euro climbed against the US dollar and default risk slid after comments by Luxembourg’s Jean-Claude Juncker soothed concern that Greece is bound for a default. Oil rose for a second day. The Greece situation is evolving from a possible default situation last week to a negotiation on terms and conditions this week. Markets find this comforting.

The MSCI Asia Pacific Index increased 0.5% at noon in Tokyo. Futures on the Standard & Poor’s 500 Index slid 0.1%. The Euro strengthened against most of its 16 major peers and added 0.2% to $1.4332. Australia’s dollar reversed gains of as much as 0.3% versus its U.S. counterpart after minutes from the central bank. Oil rallied as much as 0.8%, while zinc led an advance in metals.

About two shares climbed for every one that fell on MSCI’s Asia Pacific Index. Declines yesterday pushed the gauge’s valuation down to 14.1 times reported profits, the lowest level since March 30. Japan’s Nikkei 225 Stock Average advanced 0.9% and Australia’s S&P/ASX 200 Index gained 0.8%. The Reserve Bank of Australia – in its monthly minutes release – decided it was “prudent” to keep borrowing costs unchanged, while the Federal Reserve, which starts a two- day meeting today, is forecast to keep rates near zero.

In a sign of value emerging, Foster’s Group jumped 14% after Australia’s biggest brewer rejected an unsolicited A$9.5 billion ($10 billion) takeover offer from SABMiller Plc as too low. Foster’s says the deal undervalues the business but on our numbers and using 2012 consensus post-demerger adjusted figures, the $4.90 offer price implies an EV/EBITDA multiple of around 12x which is similar to what Kirin paid for Lion Nathan.

China Construction Bank Corp. retreated 3% in Hong Kong. Bank of America Corp. may sell some of its $21 billion stake in the Chinese bank to bolster capital before new international standards take effect, said three people briefed on the plans. Elsewhere, Woori Finance Holdings Co. advanced 5.2%, leading a rally in South Korean banks, after Daewoo Securities Co. said the nation’s loan growth may improve in the second half. Kubota Corp., a Japanese farm equipment maker, jumped 3.6% after saying full-year net income will rise 9.4%.

In the currency markets, the Australian dollar weakened to $1.0548, after earlier reaching $1.0617. The Australian Reserve Bank said it will weigh Europe’s sovereign debt crisis against a pickup in domestic growth and inflation in deciding when to increase interest rates, minutes of its June 7 meeting showed.The Euro gained 0.1% to 114.88 Yen. Assurances by Juncker helped reverse the market declines yesterday. Greek Prime Minister Papandreou called for the confidence motion after opposition parties rejected pleas for a national consensus on a 78 billion-euro package ($112 billion) of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout.

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