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Asian stocks (MXAP) rallied on the first full trading day of the new year and credit risk fell after U.S. manufacturing rose at the fastest pace in six months. Copper slumped following the biggest gain in five weeks yesterday and the Australian dollar weakened.

The MSCI Asia Pacific Index advanced 1 percent as of 11:39 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed after the U.S. equity benchmark closed at a two-month high. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 3 basis points to 196, according to Royal Bank of Scotland Group Plc prices. Copper lost 1.5 percent as zinc and aluminum dropped. Australia’s currency weakened 0.5 percent to $1.0331.

The Institute for Supply Management’s report on U.S. manufacturing yesterday added to data showing stronger factory activity in China, the U.K., India and Australia. Bookings (TMNOCHNG) for U.S. factory goods probably climbed 2 percent in November, the most in four months, according to a Bloomberg survey of economists taken before a report is released today.

“The market is now recovering as economic data across the globe have been encouraging,” said Michiya Tomita, a Hong Kong- based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion globally. “Investors have been too pessimistic because of concerns about Europe.”

Stock markets in Japan and China opened today for the first time in 2012. The MSCI Asia Pacific Index has risen 2.3 percent in the past three days after sinking 17 percent last year, the biggest drop since 2008.

Raw-Material Producers
The MSCI gauge trades at 12.2 times estimated earnings, cheaper than the six-year average of 16.7, according to data compiled by Bloomberg. The valuation multiple reached 11 in October, the lowest in three years.

About three stocks rose for each that fell in the MSCI Asia gauge. Japan’s Nikkei 225 Stock Average (NKY) climbed 1.2 percent and the Shanghai Composite Index advanced 0.2 percent. Australia’s S&P/ASX 200 jumped 2.1 percent following a rally in commodities yesterday.

Raw-material producers in the MSCI Asia Pacific Index collectively climbed 1.5 percent for the biggest gain (MXAP) among 10 industries. BHP Billiton Ltd. (BHP), the world’s largest mining company by market value, advanced 4 percent, poised for the biggest advance in a month.

The Standard & Poor’s GSCI (SPGCCI) Spot Index of 24 commodities increased 3.4 percent yesterday, the most since May 9, on speculation that increased factory output will boost raw- material demand.

The ISM’s manufacturing index rose to 53.9 in December from 52.7 a month before. A reading of 50 signals growth. Economists in a survey estimated a median reading of 53.5. Construction spending climbed 1.2 percent in November, Commerce Department data showed.

Copper in London fell to $7,675.25 a metric ton. Gold lost 0.5 percent to $1,596.28 an ounce, while oil retreated 0.2 percent to $102.74 a barrel.