Asia stocks rally on Japan, China factory gauges; oil, Euro fall

Galaxy Blocked

BHP Billiton Ltd., the world’s largest mining company, climbed 1.2 percent in Australia after commodity prices rallied last week. Samsung Electronics Co., the world’s top handset maker, fell as much as 2.4 percent in Seoul, the biggest decline in a week, after Apple Inc. won a court ruling blocking sales of the Galaxy Nexus smartphone in the U.S.

The euro fell 0.4 percent to $1.2623 and 100.68 yen before data today forecast to show manufacturing contracted and the currency bloc’s jobless rate climbed to a record, boosting prospects the European Central Bank will cut interest rates.

The ECB, which has kept borrowing costs at a record low of 1 percent since December, will probably lower the benchmark rate by 0.25 percentage point on July 5, a Bloomberg survey of economists shows. The 17-nation currency posted the biggest jump in more than a year versus the yen on June 29 after euro leaders eased terms on loans to Spanish banks and relaxed conditions on potential help for Italy.

Euro Puts

Derivatives traders see at least a year of pain for the euro even after the currency’s rally late last week. One-year options show that the premium for puts, which grant the right to sell the euro versus the dollar, over calls, which confer the right to buy, is the most relative to three-month contracts since Bloomberg began tracking the data in 2003.

“On a long-term basis what you need to make the euro a survivable currency is fiscal-policy union in Europe, and you are a long way from that,” Jeff Applegate, the chief investment officer at Morgan Stanley Smith Barney, which manages over $1.7 trillion, said in a June 29 interview. “The value of the euro will go lower.”

Corn and soybeans climbed amid concern hot, dry weather will erode prospects for crops in the U.S. Corn for December delivery gained as much as 4.6 percent to $6.64 a bushel on the Chicago Board of Trade, the highest for that contract since Sept. 12. Soybeans for November delivery rose 0.5 percent.

The S&P GSCI gauge of 24 commodities fell 0.5 percent after gaining the most since April 2009 on June 29. Copper in London declined 0.8 percent, and zinc fell 1.6 percent. Rubber futures in Tokyo jumped the most in seven months.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 168 as of 8:38 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The index is set for its lowest close since May 4, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market

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