(Adds markets, updates prices)
By Louise Heavens
SINGAPORE, Feb 4 (Reuters) - Asian stocks rose on Monday,
gaining 2.5 percent as Microsoft Corp's <MSFT.O> $45 billion
bid for Yahoo <YHOO.O> and China's purchase of a stake in
takeover target Rio Tinto boosted investor optimism over share
valuations.
But Japanese government bond futures fell more than half a
point as a 2.7 percent jump in Tokyo's Nikkei <> weakened
appetite for safe-haven debt.
Crude oil drifted at around $89 a barrel in Asian trade,
recovering a fraction of a 3 percent drop on Friday, after
President George W. Bush's gloomy assessment of the U.S.
economy and weak employment data stoked recession fears.
Stocks shrugged off the economic news, taking the huge M&A
deals as a sign that there was more value in some stocks than
had been thought. Stock markets around the world have taken a
beating this year on fears that a U.S. slowdown and a credit
crunch would hit company earnings and bring large takeover
deals to a halt.
"People were getting sceptical about big deals due to a
spreading credit market crunch, so a possible M&A of top global
companies is helping shore up investor confidence," said Kim
Joong-hyun, an analyst at Goodmorning Shinhan Securities in
Seoul.
MSCI's All Country index <.MIWD00000PUS>, which was up 0.4
percent by 0306 GMT, is still down more than 6 percent this
year.
Shares on Wall Street <> rose on Friday, with the
Nasdaq <> recording its best weekly jump in 18 months as
technology shares rallied on the Yahoo bid.
Another sentiment boost came from plans by a group of large
banks' joint effort to shore up Ambac Financial Group <ABK.N>,
a large bond insurer battered by the credit crunch.
[]
Australian shares <> were among the top gainers, with
Rio <RIO.AX> up 2 percent in the first trading session in
Australia since China teamed up with U.S. aluminium maker Alcoa
<AA.N> to buy a $14 billion stake.
That could derail BHP Billiton Ltd's <BHP.AX> efforts to
take control of Rio. BHP Billiton's shares rose 2.8 percent,
with some investors thinking that if the deal is scuppered BHP
might now not end up overpaying for Rio. []
All eyes are on BHP, which has until Feb. 6 to launch a
formal bid.
"It makes it more complicated for BHP, but it doesn't mean
that there is another bidder there. It really look like these
guys just want a seat at the table, maybe some assets," said
Steve Robinson, portfolio manager at Alleron Asset Management.
Shares in Chalco <601600.SS>, whose parent is Chinalco,
surged 10 percent.
Shanghai's composite index <> rose more than 6
percent, while Hong Kong's Hang Seng <> was up 4 percent.
South Korea's KOSPI index <> rose 3.5 percent,
Taiwan's TAIEX <> added 2 percent and Singapore's STI
<.FTSTI> gained 2.7 percent.
INTERNET BUZZ
Asian Internet companies, such as Japan's Softbank Corp
<9984.T>, China's Alibaba <1688.HK> and South Korea's Daum
Communications <035720.KQ>, raced higher after Microsoft's
takeover bid for Yahoo raised expectations that Microsoft might
make additional purchases in Asia to expand its Internet market
in the fast-growing region. []
"Microsoft's bid to expand its U.S. Internet market through
a possible Yahoo buy shows that it's also a possible scenario
it may attempt to buy Asian Internet companies as well,"
Prudential's Park Han-woo said.
MSCI's measure of Asian stocks excluding Japan
<.MIAPJ0000PUS> rose 2.6 percent. The index is still down 8
percent this year.
The dollar steadied, holding at around $1.4808 per euro
<EUR=> after recovering from a near-record low late last week
as a surprise rebound in the factory sector offset data showing
the U.S. economy's first labour market contraction in 4-
