Asian rally continues

GLOBAL MARKETS/ STOCK REPORT

Asian stocks rose for a third day, led by Mitsubishi UFJ Financial Group and National Australia Bank, on speculation the Federal Reserve will cut US interest rates to bolster growth in the world's largest economy.

Sun Hung Kai Properties led gains by developers in Hong Kong as lower borrowing costs would spur demand for real estate.

Hong Kong's interest rates typically move in tandem with those in the US because the currency is pegged to the dollar. Banks also climbed on speculation that US Treasury Secretary Henry Paulson will reach an agreement to stem further credit-market losses.

"There's a perception the Fed is getting ahead of the curve and, as a result, the US economy won't fall into recession," said Troy Angus, who helps manage the equivalent of $3.5 billion at Paradice Investment Management in Sydney.

The MSCI Asia Pacific Index gained 0.2 per cent to 162.21 at 6:33 pm in Tokyo. Japan's Nikkei 225 Stock Average fell 0.3 per cent to 15,629, and the broader Topix was little changed. Most benchmarks across the region rose.

Mitsubishi UFJ, Japan's largest publicly traded bank, gained 2.7 per cent to 1,118 yen. Mizuho Financial Group, the second-biggest, added 2.2 per cent to 608,000 yen.

Japan's banks had 1.3 trillion yen ($12 billion) in investments related to US sub-prime mortgage markets as of September 30, the nation's chief financial regulator said on November 22.

EUROPE
European stocks erased their gains as Standard Chartered and Rio Tinto Group declined. The Dow Jones Stoxx 600 Index slipped less than 0.1 per cent to 370 as of 9:07 am in London.

The measure swung between gains and losses on Monday, climbing as much as 0.4 per cent and falling as much as 0.3 per cent. The Stoxx 50 declined 0.2 per cent, while the Euro Stoxx 50, a measure for the euro region, slid 0.3 per cent.

US
US stock-index futures dropped after Banc of America recommended selling shares of E*Trade Financial Corp and as investors speculated a report on manufacturing may add to evidence that economic growth is slowing.

E*Trade, the US discount broker grappling with sub-prime mortgage losses, fell in Europe. Morgan Stanley, the country's second-biggest securities firm, and Goldman Sachs Group also declined.

Standard & Poor's 500 Index futures expiring in December retreated 1.6 points to 1,482 as of 10:12 am in London. Dow Jones Industrial Average futures lost 41 points to 13,381.

Nasdaq-100 Index futures decreased 0.25 points to 2,094.25.

"It looks like there's no light at the end of the tunnel and the tunnel is still very long," said Pio De Gregorio, head of equities at Centrobanca in Milan. "An interest-rate cut probably won't be enough to keep the credit crisis from having a very negative impact on the economy."

A report on Monday may show that manufacturing in the US grew at the slowest pace in eight months in November as factories received fewer orders and production cooled, economists said.