Asian shares: Japan, HK, S Korea gain this month

Asian had their third monthly gains after local economic reports showed rising consumer spending and reduced unemployment. Retailers such as Ito-Yokado Co and banks such as Woori Finance Holdings Co led the rally.

Japanese spending rose for the first time in five months, while the South Korean jobless rate fell to a nine-month low in January. Computer-related exporters such as Tokyo Electron Ltd and Taiwan Semiconductor Manufacturing Co were the worst performers in February after the US Conference Board's consumer confidence index fell to its lowest since October.

"I prefer domestic companies as we are seeing some improvement in the economy," said Joji Maki, who helps manage the equivalent of US$3.9 billion in assets as a senior director at Baring Asset Management (Japan) Ltd in Tokyo. "People are still worried about a potential deterioration in the US economy." The Morgan Stanley Capital International Asia Pacific Index, which tracks more than 800 companies in the region, advanced 1.3 percent to 90.49 in February, extending the 9.5 percent gain in the past two months.

Japan's Nikkei 225 Stock Average and Topix index advanced 2.4 percent and 3.3 percent respectively, their biggest monthly gains since December. South Korea's Kospi index rose 4.1 percent, its fifth straight monthly advance.

Hong Kong's Hang Seng Index climbed 4.7 percent this month, completing its 11th monthly advance. That's the longest winning streak in at least 35 years.

Drugmakers as Yamanouchi Pharmaceutical Co and Fujisawa Pharmaceutical Co were among the region's biggest gainers this week as a proposed merger between the two Japanese companies sparked speculation health-care companies will have to combine to compete with larger overseas rivals.

In the US, the Dow Jones Industrial Average posted its third monthly gain, advancing 0.9 percent, led by Wal-Mart Stores Inc, as the world's largest retailer said February sales at stores open at least a year are increasing at near the top of its 5 percent forecast from a year ago. The Dow rose 3.78 to 10,583.92 yesterday The Nasdaq Composite Index had its first monthly decline since September, shedding 1.8 percent in February. The Nasdaq fell 2.75, or 0.1 percent, to 2029.82 Friday. The S&P 500 Index yesterday gained 0.3 to 1144.94, rounding to 1.2 percent its rally for the month. It's the fifth monthly gain for the S&P 500.

Japanese reports on Friday showed manufacturers increased production at the fastest pace in four months in January and companies hired more workers, fueling a gain in household spending in the world's second-biggest economy.

Ito-Yokado, the nation's largest general merchandise chain, rallied 13 percent in February, while Mitsukoshi Ltd, Japan's No. 2 department store, advanced 14 percent.

"Consumer spending is starting to rebound, improving the outlook for sales going forward," said Hiroshi Uchida, who helps manage US$17 billion at UFJ Partners Asset Management Co, adding that he plans to increase his holdings in retail stocks.

The dollar's gain versus the yen also helped automakers such as Toyota Motor Corp that generate as much as 90 percent of their operating profit in North America, as a stronger Japanese currency threatens to lower the value of their overseas earnings.

The dollar had its second winning week against the yen. The Japanese currency has weakened 3 percent against its US counterpart this month, and recently traded at 109.00.

Toyota, the world's biggest automaker by market value, jumped 9 percent this month, after dropping 4.4 percent in January. In the three months ended Dec. 31, currency movements trimmed Toyota's operating profit by 80 billion yen (US$733 million), with the yen's increase against the dollar costing 100 billion yen.

Meanwhile, industrial production grew a seasonally adjusted 1.1 percent in January from December, more than the median 0.8 percent increase forecast in a Bloomberg News survey.