Oct. 6 (Bloomberg) -- Asian energy and metals stocks rose, led by Nippon Oil Corp. and Posco, on optimism higher commodities prices will bolster their earnings.

``We haven't seen the end of the rally in resource stocks,'' said Richard Wallace, who manages the equivalent of $102 million at Wallace Funds Management in Sydney. ``Many of these companies will be in a very good bargaining position when it comes to negotiating long-term supply contracts with customers.''

Morgan Stanley Capital International's Asia-Pacific Index, which tracks more than 900 stocks, rose 0.2 percent to 91.66 at 6:34 p.m. in Tokyo. The index measuring the energy industry group rose 0.5 percent, the biggest gain in the benchmark.

Steelmakers including Posco and Nippon Steel Corp. advanced on optimism demand from China will drive earnings. The mainland's manufacturing activity rose for a fourth month in September even as prices for the metal climbed.

Electric Power Development Co., Japan's fifth-largest electricity generator, rose on its first day of trading on the Tokyo Stock Exchange. The initial share sale of the company, known as J-Power, was the nation's biggest since NTT DoCoMo Inc. sold stocks to the public in 1998.

Japan's Nikkei 225 Stock Average added 0.9 percent to 11,385.38, its highest in two months. South Korea's Kospi index rose for a sixth day, matching a winning streak six months ago.

All other indexes in the region rose, while those in Hong Kong, Indonesia, New Zealand, Thailand and Taiwan declined. China's stock markets are shut this week for national holidays.

Oil Prices

Crude oil for November delivery rose to $51.48 a barrel in electronic trading on the New York Mercantile Exchange as of 10:29 a.m., London time.

Nippon Oil, Japan's biggest refiner, rose 2.8 percent to 726 yen. In August, the company raised its full-year profit forecast citing increased demand for oil-processing as it managed to pass on higher crude oil costs. Japan Petroleum Exploration Co., the country's largest oil producer by market value, gained 1.9 percent to 4,730 yen.

A booming economy in China, Asia's second largest, has also boosted demand for commodities including steel. The Purchasing Managers' Index, an indication of business conditions, rose last month, CLSA Asia-Pacific Markets, which compiles the report based on figures collected by pollster NTC Research, said in an e-mailed statement yesterday.

Steelmakers

The Kospi gained 0.3 percent to 887.45. The benchmark has gained every trading day since Sept. 24, matching the longest streak ended April 8. The market was shut three days last week for public holidays.

Posco, South Korea's largest steelmaker, added 2.8 percent to 184,000 won. Nippon Steel, Japan's biggest steelmaker, jumped 2.7 percent to 269 yen.

``Commodity stocks are going to benefit because commodity prices are going to be high,'' said Andrew Salton, who helps manage about $3 billion at Standard Life Investments in Hong Kong. ``Petroleum and petrochemical companies are going to have good earnings because oil prices and refining margins are high.''

Shipping Companies

The Nikkei rose for a fifth day, matching the longest winning streak ended March 2. The Topix index rose 0.7 percent to 1147.69, with the measure tracking marine transport stocks climbing 2.6 percent, the biggest gain among the 33 industries.

Nippon Yusen K.K., Japan's largest shipping line, advanced 2.9 percent to 604 yen after saying it will probably spend 1 trillion yen ($9 billion) to buy and lease new ships in the next five years, 30 percent more than an earlier plan.

Mitsui O.S.K. Lines Ltd., Kawasaki Kisen Kaisha Ltd. and Yusen, Japan's top three shipping companies, will invest almost 3 trillion yen over the next five years to buy 630 vessels, the Nihon Keizai newspaper reported earlier.

Mitsui O.S.K. advanced 2.2 percent to 684 yen. Kawasaki Kisen added 2.1 percent to 772 yen.

J-Power advanced 3 percent to 2,780 yen from its initial offer price. A government fund and nine Japanese power companies last month sold their shares in the only utility with power stations across the nation for 375 billion yen.

Indonesia

Indonesia's Jakarta Composite Index slid for the first day in six, losing 0.6 percent to 856.06. Stocks declined on concern higher oil prices will force the government to raise domestic fuel prices it subsidizes, slowing economic growth.

``The government will have to raise (subsidized) domestic fuel prices,'' said Arfan Karniody, who helps manage the equivalent of $330 million including shares of Telekomunikasi at PT Niaga Aset Manajemen in Jakarta. ``That will both boost costs at companies and hurt consumption.''

The government subsidizes fuels, especially for household consumption. The estimated fuel subsidy now stands at 59.2 trillion rupiah ($6.5 billion), from 14.5 trillion rupiah planned at the beginning of the year. Higher oil prices may prompt the government to raise fuel prices to meet budget targets.

PT H.M. Sampoerna, the exchange's second-biggest cigarette maker, slipped 3.9 percent to 6,100 rupiah. PT Telekomunikasi, the biggest phone company, shed 2.3 percent to 4,300 rupiah.

Electric Power Development Co. (9513 JT)
Japan Petroleum Exploration Co. (1662 JT)
Kawasaki Kisen Kaisha Ltd. (9107 JT)
Mitsui O.S.K. Lines Ltd. (9104 JT)
Nippon Oil Corp. (5001 JT)
Nippon Yusen K.K. (9101 JT)
Nippon Steel Corp. (5401 JT)
Posco (005490 KS)
PT H.M. Sampoerna (HMSP IJ)
PT Telekomunikasi (TLKM IJ)

To contact the reporter on this story: Michael Tsang in Tokyo mtsang1@bloomberg.net.

Last Updated: October 6, 2004 05:34 EDT