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Global Deals Boost Asian Markets

Asian markets rallied Monday, as Microsoft's bid for Yahoo and China's purchase of a large stake in takeover target Rio Tinto boosted optimism over share valuations. Japan added 2.6 percent while South Korea advanced 3.4 percent.

Rio Tinto made gains in the first trading session in Australia since China teamed up with U.S. aluminum producer Alcoa to buy a $14 billion stake. That could derail BHP Billiton's efforts to take control of Rio. BHP Billiton's shares were also sharply higher. All eyes are on BHP, which has until Feb. 6 to launch a formal bid.

Internet companies in Asia, such as Japan's Softbank and South Korea's Daum Communications, raced higher after Microsoft's $44.6 billion deal for Yahoo raised expectations that Microsoft might make additional purchases in Asia to expand its Internet market in the fast-growing region.

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.
Ian Waldie | Bloomberg | Getty Images
A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.

Japanese stocks closed at a two-week high with the Nikkei 225 Average gaining 2.69 percent. Softbank, which owns 3.9 percent of Yahoo in terms of voting rights, surged 15.8 percent. Yahoo Japan was untraded due to a glut of buy orders. Yahoo Japan is owned 41 percent by Softbank and 33 percent by Yahoo. A Microsoft acquisition of Yahoo would likely result in an alliance among Microsoft, Softbank and Yahoo Japan, establishing a more potent challenge to Google in the Japanese market, the Nikkei business daily reported.

South Korea's KOSPI finished up 3.4 percent, their biggest gain in nine weeks, led by Web portals such as NHN after Microsoft's bid for Yahoo lifted the sector, while chipmakers rose on an expected rebound in memory chip prices. Shipbuilders rallied, extending recent gains after Hyundai Heavy and a smaller rival announced big orders, easing worries that ship orders had peaked in 2007 and would shrink this year due to tough credit markets.

Australia's S&P/ASX 200 Index closed 0.4 percent higher, but eased from earlier highs as investor nerves about the global economic outlook offset expectations global miner BHP Billiton would launch a bid for rival Rio Tinto this week. Separately, shares in Fortescue Metals rose as much as 14.5 percent on a newspaper report sovereign wealth fund ChinaInvestment Corp and China Shenhua Group, China's largest coal mining firm, were in informal talks to buy a 15.85 percent stake in the Australian iron ore miner.

Hong Kong stocks leapt 3.7 percent, with construction materials companies up as severe weather continued to wreak havoc in China, while merger and acquisition news boosted internet shares. Chinese e-commerce firm Alibaba.com surged almost 17 percent on the Microsoft bid. Yahoo has a stake in Alibaba.

Singapore's FTSE Straits Times Index closed over 2 percent higher. Shares of Singapore Airlines rose as much as 3.1 percent after it reported a 51 percent rise in third-quarter operating profit on Friday, citing strong global travel demand and high ticket prices. DBS Group was also on the advance after news DBS will receive T$44.5 billion (US$1.4 billion) to take over Taiwan's Bowa Bank.

China's Shanghai Composite Index surged more than 8 percent, in response to signs that the government was taking action to halt a slide in share prices. The approval of new stock funds after a freeze of several months, official criticism of Ping An Insurance's plan for a huge stock offer, and the postponement of China Railway Construction's $4 billion IPO all restored a measure of investor confidence. Metals-related shares surged after Aluminum Corp of China (Chinalco) teamed up with U.S. aluminum producer Alcoa to buy a $14 billion stake in Rio Tinto. Analysts said this could benefit China's steel and aluminum makers by helping them lower raw material costs. Shares of Chinalco's listed unit Chalco surged its 10 percent daily limit.