By Ian C. Sayson
Bloomberg

STOCKS rose, posting the best start to a year in more than two decades, on speculation that the government will report slower inflation.

Ayala Land Inc. and Metropolitan Bank & Trust Co. rose more than 6 percent, pacing builders and banks higher, on speculation that weaker inflation will lead to lower borrowing costs, boosting property sales and demand for loans.

Energy Development Corp., also known as EDC, jumped 15 percent, the most in more than two years, as a weakening yen may cut financing costs on loans.

The Philippine Stock Exchange Index rose 101.84, or 5.4 percent, to 1,974.69 at the noon close in Manila after 12 stocks rose for each that fell among the benchmark?s 32 components. It is the index?s strongest start for a year based on data that goes back to 1987.

?Weakening inflation will help revive spending and lower corporate costs, raising the likelihood for earnings to recover later in the year,? said Jonathan Ravelas, market strategist and head of economic research at Manila-based Banco de Oro Unibank Inc.

?Investors right now are focused on the positive effects of weakening inflation.?

Inflation in December probably slowed to 9 percent from 9.9 percent in November on lower fuel and transportation costs, according to Ravelas. The government will release inflation figures tomorrow.

The Philippine Stock Exchange Index slumped 48 percent in 2008, its worst annual performance based on data that goes back to 1988, after the worst financial crisis since the Great Depression dragged economies into recessions.

The stock market was shut for public holidays from Dec. 25 through Jan. 2, when the MSCI Asia Pacific Index rallied 4.2 percent.

Ayala Land, the nation?s largest builder by market value, gained 9.4 percent to P7, its sharpest climb since Nov. 3. Metrobank, as the nation?s third-largest bank by value is called, rose 6.5 percent to P24.50, its biggest gain since Nov. 25.

A measure that tracks property companies advanced 5.7 percent, while an index made up of the nation?s biggest banks and insurance companies gained 4.4 percent.

Megaworld Corp., the nation?s no. 2 provider of offices for call centers and builder of apartment towers by market value, jumped 9.1 percent, to P0.72, its sharpest advance since Dec. 15. Bank of the Philippine Islands, the nation?s biggest bank by value, climbed 6.5 percent to P41, its most since Nov. 25.

Energy Development, the nation?s largest geothermal energy producer, soared 15 percent to P2.18, its steepest advance since Dec. 13, 2006. The yen fell to 92.06 earlier Monday, extending its depreciation against the US dollar since Dec. 24 to 1.8 percent.

?The yen?s depreciation is highly favorable for EDC,? said Ron Rodrigo, head of research at DBP Daiwa Securities SMBC Philippines Inc. in Manila.

?The financing cost of EDC?s yen-denominated loans falls from a weaker yen.?

About 83 percent of Energy Development?s P25.3-billion debt is denominated in yen, Paul Aquino, president of Manila-based EDC, said in June.

First Gen Corp., which owns EDC, gained 9.7 percent to P10.75. First Philippine Holdings Corp., parent of First Gen, added 9.8 percent to P16.75.

The following companies are among the most active in Philippine trading. Stock symbols are in parentheses.

Abacus Consolidated Resources Holdings Inc. (ABA PM), an operator of an online lottery system, climbed 4 centavos, or 6.4 percent, to P0.67, extending a 26-percent gain on Dec. 24. The company said it would begin selling land this year in an 82-hectare resort and residential project in Batangas.

Atlas Consolidated Mining & Development Corp. (AT PM), the nation?s second-largest metals producer, gained 20 centavos, or 7.3 percent, to P2.95, its sharpest advance since Nov. 28. The miner said it signed an agreement extending the maturity of debts it owed to funds managed by the Spinnaker Capital Group. Atlas also said that a $24.95-million debt owed by its unit Carmen Copper Corp. to CASOP Atlas BV and CASOP Atlas Corp. would be swapped into Carmen Copper shares.

Philex Mining Corp. (PX PM), the largest local metals producer by market value, gained 10 centavos, or 2 percent, to P5, its highest close since Dec. 18 on higher prices of gold and copper.

Gold for immediate delivery climbed as much as 1.1 percent earlier Monday. Copper for delivery in three months was 0.5 percent lower after advancing 5.2 percent on Jan. 2 to its highest close since Dec. 11.