(July 1) -- Asian stocks advanced for the first time in three days after confidence among Japan's largest manufacturers fell less than economists estimated, signaling the nation's exporters expect to withstand the U.S. slowdown.

Honda Motor Co. led gains in Tokyo after the Tankan index of manufacturer sentiment fell to 5 points this month from 11 in March. Rio Tinto Group Ltd., the world's third-largest mining company, climbed after it won a price increase of as much as 97 percent for contract iron ore from its Asian steelmaker customers.

The MSCI Asia Pacific Index added 0.3 percent to 137.12 as of 9:10 a.m. in Tokyo, halting a two-day, 1.6 percent loss. Benchmarks in all regional markets open for trading advanced.

Japan's Nikkei 225 Stock Average climbed 0.2 percent to 13,504.74, snapping an eight-day, 6.7 percent slump. The median estimate of 32 economists surveyed by Bloomberg was for a drop to 3 points in the Tankan. Large companies said they plan to increase capital spending 2.4 percent this fiscal year, after saying they would cut investment three months ago.

Most U.S. stocks fell for a third day yesterday, capping the market's worst month in six years, on concern that deepening mortgage losses will force more banks to cut dividends or sell shares at a discount. Wachovia Corp. tumbled to the lowest since 1992, while Lehman Brothers Holdings Inc. plunged.

MSCI's Asian index declined 13 percent in the first six months of 2008, its worst first-half performance since 1992, as record oil prices and credit-market losses weigh on global economic growth.

(Editor: Haijing Qu)