Asian mining stocks climbed, led by BHP Billiton and Rio Tinto Group, after both companies won an increase in iron ore prices from Chinese steelmakers.
An agreement on iron ore prices is what “the market wanted,” said Jason Teh, who manages $4 billion at Investors Mutual in Sydney. “The Chinese ultimately had no choice but to accept in the middle of a commodities boom.”
The Morgan Stanley Capital International Asia-Pacific Index, a measure of 14 markets, added 0.1 percent to 119.53 as of 7:43 p.m. in Tokyo, ending a two-day, 2.1 percent drop. Materials and energy-related stocks posted the biggest gains among the index’s 10 industry groups.
Exporters such as Sony Corp. fell after a rebound in U.S. housing starts added to concern the world’s central banks will keep raising borrowing costs.
In Japan, the region’s largest market, the Topix index lost 0.3 percent, while the Nikkei 225 Stock Average was little changed. Benchmarks fell in Taiwan, New Zealand, Indonesia, Shenzhen, Pakistan and the Philippines. Indexes rose elsewhere. India’s Sensitive index climbed 2.2 percent, Asia’s biggest jump.
BHP, the world’s largest mining company, gained 3.1 percent to A$26.98 in Australia. Rio Tinto Group, the world’s third- biggest miner, climbed 2.5 percent to A$75.25.
Baosteel Group Corp., which represents China’s steelmakers in negotiations, accepted a 19 percent iron-ore price increase from BHP and Rio. The steelmakers, which account for 43 percent of iron-ore shipments, were seeking a more modest increase than the 19 percent accepted by counterparts in Europe and Japan.
The agreement marks the end of more than half a year of negotiations. Prices rose a record 71.5 percent last year. BHP and Rio, together with Brazil’s Cia. Vale do Rio Doce, account for 75 percent of the iron ore trade.
Baoshan Iron & Steel Co., the listed unit of China’s biggest steelmaker, fell 1.4 percent to 4.14 yuan. Higher prices for iron ore, the raw material used to make steel, will raise the production costs for Chinese steelmakers.
“Some investors are a bit disappointed at the result and they had hoped for a less aggressive price increase,” said Fan Dizhao, who helps manage about $1.8 billion with Guotai Asset Management Co. in Shanghai. “The cost concern for steelmakers is now looming.”
BHP and Rio also gained after gold for immediate delivery climbed 1.1 percent, while copper in London rose 1.2 percent.
Jiangxi Copper Co., China’s largest listed copper producer, jumped 3.4 percent to HK$6.10. Zijin Mining Group Co., which runs China’s biggest gold mine, added 1.6 percent to HK$3.175.
Sony, maker of PSP portable game consoles and Cyber-shot digital cameras, lost 1.5 percent to 4,770 yen. Nintendo Co., the world’s biggest maker of handheld video-game players, dropped 3 percent to 18,840 yen.
U.S. builders broke ground for homes at a 1.957 million annual rate in May, a 5 percent jump from a month earlier, Commerce Department figures showed. The result beat some economists’ estimates, adding to concern the Federal Reserve may keep boosting rates to curb inflation.
Fed policy makers meet next week to decide on whether to raise borrowing costs for the 17th time since June 2004. The U.S. is Asia’s biggest export market.
“Some investors are bearish on the U.S. economic outlook and the current condition only encourages them to sell more exporter stocks,” said Hideo Arimura, who helps look after $16 billion at Dai-Ichi Kangyo Asset Management Co. in Tokyo.
LG Electronics Inc., South Korea’s second-largest electronics maker, dropped 1.5 percent to 52,500 won. Hynix Semiconductor Inc., Asia’s second-largest memory chipmaker, fell 3.2 percent to 27,350 won.
Meanwhile, Bank of Japan Governor Toshihiko Fukui said yesterday the central bank must “implement policy steps without delay,” suggesting the central bank is close to increasing rates from near zero. Fukui later qualified the statement, saying he didn’t intend to point to a specific time for raising rates.
Real estate companies fell on concern profits will be hurt as higher interest rates in Japan increase their debt payments.
Sumitomo Realty & Development Co., Japan’s fourth-largest property developer, slid 2.5 percent to 2,535 yen. Mitsubishi Estate Co., the biggest by market value, lost 2.3 percent to 2,165 yen.