Asian stocks rose yesterday , extending earlier gains, as Microsoft Corp.’s $45 billion bid for Yahoo and China’s purchase of a stake in takeover target Rio Tinto boosted investor optimism over share valuations.

Stock markets in Tokyo, Hong Kong, Seoul and Taiwan rose between 2 and 4 percent while Shanghai climbed 8 percent — its biggest daily gain since June 2005 — as the government approved the launch of two stock funds by domestic mutual fund firms in an apparent bid to prevent the local stock market from sliding further.

Shanghai’s market is down 12 percent so far this year. The Philippine Stock Exchange index closed 0.88 percent higher. Trading in Asia was limited as many investors in the region are away this week for Lunar New Year holidays.

Trading turnover reached 1.78 billion shares for P3.07 billion. Claire Quiray, Accord Capital Equities, Inc. analyst, noted that trading remains conservative despite the recent hikes by the market index. Most actively traded PLDT was up P20 to P3,010. Rival Globe Telecoms, Inc. was also up P40 to P1,640.

Ayala Corp., Globle’s mother company, was steady at P472.50. Ayala Land, Inc., another Ayala unit was up P0.25 to P14. Manila Electric Co., was down P1 to P83. GMA Philippine Depository Receipt was up P0.40 to P6.40. Megaworld Corp. was up P0.05 to P2.95. Manila Water Co., Inc. was steady at P18.75.

Claire Quiray, Accord Capital Equities, Inc. analyst, noted that trading remains conservative despite the recent hikes by the market index.

"Investors are still looking at how the US stimulus package could help alleviate the US condition and a more clear indication of the US’ recession concerns," said Quiray.

"But investors are now looking at small gains that they can find in the market, taking positions whenever possible," she added.