By Rocky Swift and Akiko Ikeda March 3 (Bloomberg) -- Asian stocks rose, erasing the benchmark index’s loss on the year, and regional currencies climbed on speculation austerity measures in Greece will shore up confidence in the global recovery. The MSCI Asia Pacific Index climbed 0.6 percent to 120.70 at 12:18 p.m. in Tokyo, bringing its return in 2010 to 0.2 percent, driven by commodity producers as raw materials prices advanced. South Korea’s won led Asian currencies higher, approaching last month’s high, as Greece’s efforts to repair its finances helped shore up demand for riskier assets. Greece Prime Minister George Papandreou will today announce as much as 4.8 billion euros ($6.5 billion) in extra deficit cuts, including higher taxes and steeper reductions in public workers’ bonuses, said a person familiar with the matter, who declined to be identified because the details aren’t yet public. “Greece has been a source of anxiety,” said Hiroshi Morikawa, a strategist in Tokyo at MU Investments Co., which manages $14 billion. “If the government measures are not what investors expect, concerns on Greece issues will reignite and shares will plunge.” Australia’s S&P/ASX 200 Index rose 0.8 percent, leading all Asian benchmarks as the government said the economy expanded at the fastest pace in almost two years in the fourth quarter. National Australia Bank Ltd. climbed 1.5 percent to A$25.98. Wesfarmers Ltd., Australia’s second-biggest retailer, gained 1.5 percent to A$32.59. Commodity Suppliers Shares of raw material suppliers advanced the most of the 10 industry group on the MSCI Asia Pacific index on speculation the global recovery will boost metals demand. Fortescue Metals Group Ltd., Australia’s third-biggest iron-ore producer, jumped 3.6 percent to A$4.87. Rio Tinto Ltd., the world’s third-largest mining company, gained 2.2 percent to A$73.58. Mitsubishi Corp., a Japanese trading house that gets about 40 percent of sales from commodities, increased 2.4 percent to 2,301 yen in Tokyo. The London Metal Exchange Index of six metals including copper and zinc climbed 1.5 percent yesterday, a third day of gains. Crude oil for April delivery rose 1.3 percent to settle at $79.68 a barrel in New York. Gold futures rose 1.7 percent to $1,137.40 an ounce. Asahi Glass Co., Asia’s largest glassmaker, gained 3.8 percent to 912 yen. The company plans to invest NT$42 billion ($1.3 billion) in Taiwan over the next three years to meet growing demand for glass from AU Optronics Corp. and Chi Mei Optoelectronics Corp., the island’s government said. Won Advances China Steel Corp., Taiwan’s biggest steel producer, advanced 0.6 percent after it said the market has returned to the levels before the global financial crisis, paving the way for price increases. Evergreen International Storage & Transport Corp. climbed 3.2 percent trading after the United Evening News said the government may invite experts to discuss the building of Taoyuan’s third airport terminal. The won climbed 0.5 percent to 1,146.45 per dollar in Seoul, a fourth straight gain, according to data compiled by Bloomberg. February’s high of 1,140.97 was the strongest level since Jan. 21. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, rose 0.1 percent, extending this year’s advance to 0.6 percent. “Fears surrounding Greece had been a drag on many Asian currencies, and as soon as that gets resolved that’ll be supportive,” said David Cohen, a Singapore-based economist at Action Economics. “The economic data has been encouraging as the region’s growth continues to pace the global recovery.” Greece Plan Thailand’s baht reached its strongest level since June 2008, while the Singapore dollar and Malaysia’s ringgit touched five- week highs. Concern that Greece may fail to rein in the European Union’s widest budget deficit and sovereign risk will spread to other nations in the euro-zone has roiled global markets, sending the MSCI World Index down 3.6 percent from a 15-month high on Jan. 15, on a closing basis. Standard & Poor’s and Moody’s Investors Service, which cut Greece’s sovereign credit rating in December, said they may reduce its ratings further should the nation fail to implement a deficit-reduction program. “As long as Greece presents a solid plan to rebuild its budget, organizations such as the EU, IMF and World Bank should be able to rescue the nation,” said Hiroshi Watanabe, an economist at the Daiwa Institute of Research in Tokyo. “Meanwhile, the economic recovery is picking up fast in developing nations, thanks to fiscal measures. As sovereign issues ease, that trend should continue, supporting stocks.” Dollar Falls The cost of protecting bonds in Asia from default fell, according to traders of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 1.5 basis points to 107 basis points, as of 8:24 a.m. in Hong Kong, according to Citigroup Inc. The Markit iTraxx Japan index dropped 1 basis point to 136 as of 9:15 a.m. in Tokyo, Morgan Stanley prices show. The Markit iTraxx Australia index added 1 basis point to 90.5 as of 8:24 a.m. in Hong Kong, according to Citigroup Inc. The dollar fell for a second day against the euro as traders increased bets the Federal Reserve will keep its target interest rate near zero to sustain a recovery in the world’s biggest economy. The dollar dropped to $1.3640 per euro in Tokyo from $1.3615 in New York yesterday when it fell to $1.3436, the weakest since May 18. The greenback slipped to 88.68 yen from 88.85 after earlier declining to 88.48, the lowest since Dec. 14. Interest-rate futures on the Chicago Board of Trade yesterday showed a 39 percent chance the Fed will hold its target lending rate between zero and 0.25 percent by November, compared with 30 percent odds a week earlier. Oil, Copper “With a recovery in the jobs market in the U.S. remaining weak, the Fed can’t start raising its federal fund rate immediately,” said Takeshi Makita, senior economist in Tokyo at Japan Research Institute Ltd., a unit of Japan’s third-largest banking group, Sumitomo Mitsui Financial Group Inc. “This view will continue to weigh on the dollar.” Crude oil traded near $80 a barrel in New York after rising on a possible resolution to Greece’s budget problems and a decline in distillate supplies in the U.S., the world’s biggest energy consumer. Oil was at $79.66 a barrel after gaining 1.3 percent yesterday after the American Petroleum Institute said stockpiles of distillate fuel, a category that includes heating oil and diesel, dropped 4.07 million barrels last week, signaling rising fuel demand. “Markets are becoming a little more optimistic about the international economic outlook,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. Copper for three-month delivery dropped 1.4 percent to $7,385 a metric ton, declining for the first time in four days, after Codelco, the world’s largest miner of the metal, said it returned to full output after a magnitude 8.8 earthquake on Feb. 27 knocked out power to two mines. Aluminum fell 0.7 percent to $2,153 a ton. To contact the reporters for this story: Rocky Swift in Tokyo at rswift5@bloomberg.net; Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

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