Bloomberg Asian Stocks, U.S. Futures Advance on Citigroup Speculation

Feb. 23 (Bloomberg) -- Asian stocks and U.S. futures rose on optimism that the U.S. government will raise its stake in Citigroup Inc., reducing the risk of bank failures. Treasuries and the dollar fell.

KB Financial Group Inc., which controls South Korea’s largest lender, gained 1.8 percent as the Wall Street Journal said Citigroup had proposed that the U.S. convert a large portion of its preferred shares into common stock in a transaction that wouldn’t cost taxpayers more money. Samsung Electronics Co. rose 1.7 percent in Seoul as the government pledged measures to bolster the economy. Ten-year Treasuries fell on reduced demand for safe-haven assets.

“News that the government is increasing its stake will inject some confidence to investors that no matter what happens, these mega banks will not be allowed to fail, and that what ever losses they have can be absorbed by the government,” said Nicole Sze, a Singapore-based investment analyst for Bank Julius Baer & Co, which manages $350 billion.

The MSCI Asia Pacific Index gained 0.6 percent to 76.49 at 12:59 p.m. in Tokyo, having earlier fallen 1.1 percent. The gauge lost 15 percent this year as the worsening economic slowdown hurt corporate profits. Most key Asian indexes rose, led by South Korea’s Kospi Index, which climbed 2 percent. more...