By Patrick Chu and Shani Raja Dec. 29 (Bloomberg) -- Asian commodity stocks rose and metals gained on expectations for increasing demand from China and labor strife in Chile’s copper industry. Japanese banks fell on speculation the companies will have to raise capital. The MSCI Asia Pacific Index was little changed at 120.40 as of 2:58 p.m. in Tokyo. Copper on the London Metal Exchange rose as much as 2.8 percent to a 15-month high of $7,270 a metric ton, as trading resumed after a two-day break. Sumitomo Mitsui Financial Group Inc. fell as much as 3.5 percent, dragging down the Nikkei 225 Stock Average. U.S. stock futures edged higher. Mining companies led the MSCI Asia index’s 34 percent gain this year on demand from China, which said last week that it needs to revise growth estimates for 2008 and 2009 because they are too low. Emerging-market equity funds inflows surged threefold last week to $1.7 billion from the previous five days, according to EPFR Global. This year’s record $80.3 billion of inflows are “way off the charts in terms of being a record-seeing year,” Brad Durham, managing director at the Cambridge, Massachusetts-based EPFR, said in a Bloomberg Television interview. Australia’s S&P/ASX 200 Index advanced 1.1 percent, the biggest increase among stock markets in Asia. BHP Billiton Ltd., the world’s biggest mining company, gained 1 percent. Japanese commodity trading houses climbed: Mitsubishi Corp. was up 1.5 percent and Mitsui & Co. added 2.4 percent. Chinese Mining Companies Huludao Zinc Industry Co., China’s second-largest zinc producer, climbed as much as 2.8 percent to a two-week high. Jiangxi Copper Co., the nation’s biggest metal producer, added 1 percent. Copper jumped by the most in six weeks on the LME as trading resumed after the holidays, catching up with gains in other metals markets. Workers at the Chuquicamata copper mine, the world’s second-largest, will begin a strike on Dec. 31 unless Codelco extends labor talks into the first week of January, union official Miguel Lopez said in an interview today. Xstrata Plc’s Altonorte copper smelter was hit by a strike yesterday after management and workers failed to agree on a new wage contract. Nickel in London today gained 3 percent to $19,200 a ton and zinc advanced as much as 3.7 percent. “Metals prices are still on an upward trend, thanks to the rising demand amid the economic recovery,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “That will continue to boost prices of underlying equities.” Japanese Banks Fall Japanese banks were the biggest losers after Sumitomo, the country’s second-largest publicly traded bank, said it’s considering whether to raise more funds. The world’s largest financial companies are shoring up capital after more than $1.7 trillion in losses and writedowns following the collapse of the U.S. subprime-mortgage market and of Lehman Brothers Holdings Inc. in the world’s biggest bankruptcy. “There are still concerns about banks raising capital,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees $4 billion in Tokyo. The dollar traded near a two-month high against the yen on speculation the Federal Reserve will start retracting emergency stimulus measures as the economy recovers. The dollar bought 91.69 yen in Tokyo from 91.63 in New York yesterday. The U.S. currency rose to 91.87 on Dec. 22, the strongest level since Oct. 27. The dollar traded at $1.4375 per euro from $1.4378 yesterday. The euro was at 131.74 yen from 131.76 yen. Treasury Auction Treasuries were little changed before today’s $42 billion auction of five-year notes. The U.S. government’s $44 billion sale of two-year notes yesterday met lower-than-estimated demand, sending yields on the securities at the highest level since August. Treasury is scheduled to sell $32 billion of seven-year debt tomorrow. Treasuries of all maturities have fallen 3.7 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since at least 1978, when Merrill began collecting the data. The benchmark 10-year note yielded 3.85 percent, near the highest level since Aug. 10, in Tokyo, according to BGCantor Market Data. The yield on two-year notes was 1.09 percent, matching the highest bid at yesterday’s sale. Wheat for March delivery on the Chicago Board of Trade dropped 1 percent to $5.455 a bushel. The contract rallied 5 percent yesterday on speculation that fund managers will purchase agricultural commodities at the start of 2010, anticipating improved demand as the global economy strengthens. Corn fell 0.3 percent to $4.1475 a bushel after rising 1.8 percent yesterday. Crude Oil Crude oil for February delivery was at $78.65 a barrel, down 12 cents, in electronic trading on the New York Mercantile Exchange. Oil has advanced 76 percent this year, the biggest annual gain in a decade. Oil rose 0.9 percent yesterday as U.S. holiday retail sales climbed. The U.S. economy will turn in its best performance since 2004 next year as spending picks up and companies boost investment and hiring, said Dean Maki, the most accurate economic forecaster in a Bloomberg News survey. “It’s pure optimism leading into the first quarter,” Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney, said by phone. “People are happy about what’s happening and think commodities will be sought after. Whether it will last after that is another thing.” To contact the reporters on this story: Patrick Chu in Tokyo at pachu@bloomberg.net.

Source