By James Poole and Shani Raja March 5 (Bloomberg) -- Asia stocks advanced, heading for their second weekly gain, and the yen dropped as U.S. jobless claims fell, Greece debt concerns diminished and speculation grew the Bank of Japan will take further steps to ease credit. The MSCI Asia Pacific Index added 0.9 percent to 120.78 at 2:30 p.m. in Tokyo and the yen fell against all 16 of its most- traded counterparts. The cost of protecting Asia-Pacific bonds from default slid to the lowest level in more than five weeks. Shipping rates for commodities jumped the most since July. Standard & Poor’s 500 stock futures rose 0.2 percent. U.S. and Asian shares rallied after a report yesterday said weekly jobless claims dropped from a three-month high, defusing concern that America’s recovery is slowing. Japanese stocks surged on speculation the Bank of Japan may loosen monetary policy. Investor sentiment also improved as Greece began selling 5 billion euros ($6.8 billion) of 10-year bonds. “There’s been quite an abundance of leading indicators pointing to an improving employment backdrop,” said Nader Naeimi, an investment strategist in Sydney at AMP Capital Investors, which oversees $90 billion. “Jobs are key to the sustainability of the recovery.” More than seven shares climbed for each one that fell on the MSCI Asia Pacific gauge, which is up 2.2 percent this week. Japan’s Nikkei 225 Stock Average gained 2.1 percent today. Billabong International Ltd., a surfwear maker that gets 44 percent of its revenue from the Americas, added 3.6 percent in Sydney. Sony Corp., maker of the PlayStation 3 game machine, was up 3.4 percent, while STX Pan Ocean Co. and Korea Line Corp., Korea’s biggest bulk-shipping lines, jumped as much as 6.4 percent after the Baltic Dry Index soared 7.2 percent yesterday. Yen Weaker The yen dropped on speculation the Bank of Japan will discuss ways to lower short-term rates at its two-day meeting starting March 16, the Nikkei newspaper said today. The yen weakened to 89.26 per dollar in Tokyo from 89.02 in New York yesterday when it touched 88.14, the strongest level since Dec. 10. The euro traded at $1.3591 from $1.3581 in New York and bought 121.32 yen compared with 120.91 in New York. “Given the fact that the BOJ is already running far behind other central banks in exit strategies and prospects that interest rates here will remain low, the yen-carry trade may become popular again,” said Soichiro Mori, a Tokyo-based strategist at FXOnline Japan Co., a margin-trading company. South Korea’s won strengthened 0.4 percent to 1,140.90 per dollar, bringing its advance this week to 1.6 percent, as investors bought emerging-market assets on signs investors are gaining confidence in Greece’s plan to cut its deficit. The MSCI Emerging Markets Index gained 0.5 percent. Yuan Bets “The Greece stuff has led to stock markets going up and sentiment improving,” said Tae-Shin Park, a currency and bond trader at Societe Generale SA in Seoul. “Positions for yuan appreciation are quite heavy in China, so I think once more risk appetite comes in, emerging markets will outperform.” Options traders are more bullish on the yuan than any other currency. The premium charged for the right to buy yuan in three months over contracts to sell has more than tripled this year to 2 percentage points, the most since China last ended a fixed- exchange rate in July 2005, so-called risk-reversal rates show. Premier Wen Jiabao told lawmakers the government will promote the yuan’s usage abroad and aims to manage inflation expectations, goals that may be aided by a stronger currency. He also said China will keep the yuan “basically stable.” Credit-Default Swaps The cost of protecting Asia-Pacific bonds from default fell to the lowest level since Jan. 25, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 4.5 basis points to 102 basis points in Hong Kong, according to Citigroup Inc. and CMA DataVision prices. Global bond funds received $2.6 billion in the week to March 3, the biggest inflows since at least 2000, EPFR Global, a Cambridge, Massachusetts-based research company, said in an e- mailed statement. U.S. bond funds absorbed $2 billion in their 61st week of inflows. Emerging market bond funds received more money and have taken more than $4 billion this year, EPFR said. Crude oil advanced in New York, and was poised to increase for the third time in four weeks, on optimism fuel demand will grow amid improved prospects for an economic recovery in the U.S., the biggest consumer. Oil gained 0.7 percent to $80.77 a barrel on a report that the Organization of Petroleum Exporting Countries will cut shipments by 2.3 percent in the month ending March 20. Copper for three-month delivery added 1 percent to $7,476.50 a metric ton. To contact the reporters for this story: James Poole in Singapore jpoole4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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