Upbeat on mergers talk

GLOBAL MARKETS

Asian stocks climbed, driving benchmarks in South Korea and Hong Kong to records, on takeover speculation in the metals industry and higher commodity prices.

Rio Tinto Group climbed to a new high after a newspaper report said it would bid for Alcan. The world's No. 3 mining company announced an offer after the close of trading in Australia. South Korea's Posco led the region's steel producers higher after Chaparral Steel agreed to be bought for $4.22 billion.

"We'll continue to see a spate of takeovers across the region,'' said Nicole Sze, a Singapore-based analyst at Bank Julius Baer & Co., which manages $350 billion worldwide. Mergers and acquisitions "help create positive sentiment as investors look to see who the next target will be.''

Samsung Electronics paced gains in South Korea after an interest-rate increase reinforced confidence in the nation's economic recovery. China Mobile rose in Hong Kong after Citigroup recommended investors buy the stock.

Europe

European stocks rose for the first time in three days, led by BHP Billiton and Xstrata, after Rio Tinto Group's $38.1 billion purchase of Canada's Alcan fanned takeover speculation in the industry.

Alstom jumped the most since April after the world's third-biggest maker of power plants said sales rose 27 per cent, driven by increased investment in electricity grids. Nokia climbed after Motorola of the US posted a quarterly loss because it's losing customers to the Finnish mobile-phone company.

Europe's Dow Jones Stoxx 600 Index gained 0.1 per cent to 393.21 in London, with 11 of 18 industry groups advancing. US equities rose yesterday, boosted in part by merger speculation in the metals industry.

Rio Tinto's bid for Alcan "had been rumoured for weeks and continues the consolidation that we have been seeing in the industry,'' said Lucy MacDonald, who helps manage $100 billion as chief investment officer for global equities at RCM in London. "Equity markets still look pretty well underpinned. There is a lot of liquidity out there.''

US

US stock-index futures were little changed after Motorola predicted a second-quarter loss while Genentech posted earnings that beat analysts' estimates. Motorola slid in Europe after the world's second-biggest maker of mobile phones said it had a quarterly loss as sales missed its forecasts for the third time this year. Shares of Genentech, the world's No. 2 biotechnology company, increased.

The company raised its forecast for 2007 earnings.

"We'll have to wait for more earnings reports,'' said Guenther Gerstenberger, a fund manager at Oberursel, Germany- based PEH Wertpapier, which oversees about $5.5 billion.

Alcoa rose after Rio Tinto Group, the world's third- largest mining company, agreed to buy Alcan.