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Asia: Stocks rise with oil near 15-month high; Samsung, yen fall

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Asian stocks rose, led higher by energy companies, as the prospect of a deal to limit crude output and tackle the global glut kept oil above US$51 a barrel. The US dollar climbed versus major peers as Treasuries retreated.

[WELLINGTON ] Asian stocks rose, led higher by energy companies, as the prospect of a deal to limit crude output and tackle the global glut kept oil above US$51 a barrel. The US dollar climbed versus major peers as Treasuries retreated.

Japan's Topix index jumped to a four-month high, buoyed by the yen's losses in the equity benchmark's first day of trading this week. Samsung Electronics Co drove declines in South Korea, sliding the most in a month after telling retail partners to stop sales and exchanges of its beleaguered Galaxy Note 7 smartphone.

The greenback dominated currencies from New Zealand to Thailand as 10-year Treasury yields added five basis points following Monday's market holiday. US crude was near its highest price in 15 months. Gold fell.

Optimism over a deal to address the global surplus in crude has bolstered sentiment in markets at a key juncture, given investor angst over the looming US presidential election and the potential for a Federal Reserve interest-rate increase before the year is out. Ministers from some of the world's largest oil-producing nations are gathering in Turkey to discuss ways of dealing with the glut, after provisionally agreeing to freeze output last month.

Russia indicated it is willing to join Opec efforts to stabilise the market, while the Saudi energy minister said he's "optimistic" producers will be able to realise a deal.

"The fact that Russia has shown willingness to cooperate with Opec is a tailwind for oil prices going forward," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co in Tokyo.

"In the short term, it's positive for oil and mining shares, and it's also improved market sentiment."

While markets in Japan, Hong Kong and Taiwan resume trading Tuesday following holidays, India is shut for a two-day break. Reports on business confidence as well as home and investment lending are due in Australia, with Fed Bank of Chicago President Charles Evans to speak in Sydney. The Philippines issues data on trade.

Stocks

The US dollar-denominated MSCI Asia Pacific Index, which counts Samsung as its third-biggest member, rose 0.2 per cent by 10am Tokyo time, as more than four shares advanced for each that retreated.

The Topix gained 0.9 per cent from Friday levels, rising for the fifth time in six days, while Australia's S&P/ASX 200 Index increased 0.4 per cent, led higher by energy producers and mining stocks.

New Zealand's S&P/NZX 50 Index added 0.4 per cent, rising for the first time in six days.

The Kospi index was little changed in Seoul as Samsung slipped as much as 5 per cent.

Global trading has gotten off to a rocky start in October amid speculation that the European Central Bank will start tapering stimulus and as hawkish comments from Fed officials boosted bets on a rate increase in 2016.

Minutes from the US central bank's September meeting will be released on Wednesday, and data on retail sales, producer prices and consumer sentiment are due Friday. Investors are also seeking clues as to the health of corporate America, with Alcoa Inc kicking off the next earnings season on Tuesday.

Futures on the S&P 500 advanced 0.1 per cent to 2,160.25 after the underlying benchmark climbed 0.5 per cent on Monday. In Hong Kong, futures on the Hang Seng Index were down 0.2 per cent as those on the Hang Seng China Enterprises Index lost 0.3 per cent. FTSE China A50 Index futures rose 0.2 per cent.

Currencies

The yen, which typically moves at odds with Japanese stocks, dropped 0.3 per cent to 103.92 per US dollar, weakening for the 10th time in 11 sessions.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose for a second day, gaining 0.1 per cent as the Kiwi, Thai baht, Australian dollar and Korean won all lost at least 0.2 per cent.

The offshore yuan also weakened, slipping for an eighth straight day in its longest retreat since 2014. The currency was down 0.1 per cent to 6.7235 a US dollar in Hong Kong, touching its weakest level since Jan 7. The onshore-traded yuan tumbled the most in four months last session as mainland Chinese markets resumed following a week-long holiday.

The Malaysian ringgit, which is sensitive to moves in the oil price, gained 0.1 per cent.

Mexico's peso held gains near its strongest level in a month after surging almost 2 per cent last session on speculation Republican Party candidate Donald Trump's performance in the second US presidential debate wasn't strong enough to boost his chances against Democratic nominee Hillary Clinton.

"With Secretary Clinton taking the upper hand at the debate, negative factors have been scaled back a little for the markets," Mr Matsuno at SMBC Friend Securities said.

Bonds

Treasury notes due in a decade yielded 1.77 per cent as trading resumed following the Columbus Day bond-market holiday.

The Treasury decline is being driven by the willingness of Saudi Arabia and Russia to cooperate on an oil output deal, said John Gorman, head of non-yen rates trading for Asia and the Pacific at Nomura Holdings Inc in Tokyo.

Asian government debt followed suit, with yields on 10-year Australian bonds up seven basis points, or 0.07 percentage point, to 2.25 per cent. Rates on similar maturity notes in New Zealand and Japan climbed by at least one basis point.

Commodities West Texas Intermediate crude slipped 0.3 per cent to US$51.21 a barrel after jumping 3.1 per cent last session to its highest closing price since July 2015. Brent traded at US$53 per barrel.

Oil has gained almost 15 per cent since the Organization of Petroleum Exporting Countries provisionally agreed last month to cut production for the first time in eight years. The group's members meet this week in Istanbul for talks on implementing the deal and Saudi Arabian Energy Minister Khalid Al-Falih said it's not unthinkable prices will rise to US$60 a barrel by the end of this year.

Gold for immediate delivery dropped 0.2 per cent to US$1,257.21 an ounce, declining for the ninth time in 11 days.

BLOOMBERG