Asia stocks rebounded from the biggest slump in two months as U.S. regulators were split on suing Goldman Sachs Group Inc. The yen fell as signs of a recovery damped demand for the Japanese currency as a refuge.

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The MSCI Asia Pacific Index advanced 0.5 percent to 126.25 as of 12:32 p.m. in Tokyo after plunging 2.1 percent yesterday. The yen slid against 15 of 16 major counterparts. Futures on the Standard & Poor’s 500 Index were little changed.

Banking shares in the U.S. and Asia jumped after a Bloomberg News report said the Securities and Exchange Commission voted 3-2 to sue Goldman Sachs for fraud. Japan’s demand for services fell less than economists estimated in February, highlighting the recovery is starting to benefit households, and Federal Reserve Bank of Chicago President Charles Evans said in a televised interview that the U.S. recession is “definitely over,” following news that the index of U.S. leading indicators rose 1.4 percent in March, the most in 10 months, a sign the economy will grow in the second half.     “The leading indicators show that the recovery is ongoing and the market is now focusing on the earnings season,” said Roger Groebli, the Singapore-based head of financial market analysis at LGT Capital Management, part of the group that oversees $84 billion. “The Goldman Sachs suit is a problem for the industry but the financial regulatory issue has been recognized earlier.”

The Nikkei 225 Stock Average climbed 0.4 percent, the Hang Seng Index increased 0.6 percent, and the Kospi index advanced 0.6 percent, all rising for the first time in three days.

Banks Rise

Sumitomo Mitsui Financial Group Inc. rose 1.1 percent in Tokyo as Morgan Stanley upgraded the nation’s banks and Citigroup Inc.’s profit beat estimates. Bank of East Asia Ltd., the third-biggest Hong Kong lender by market value, climbed 0.5 percent, while HSBC Holdings Plc, Europe’s largest, increased 0.5 percent in Hong Kong trading.     China Minsheng Banking Corp., the nation’s first privately owned lender, rallied 3.8 percent in Hong Kong, poised for the biggest gain since its initial share offering in the city in November 2009, after profit jumped 53 percent last year.

The suit against Goldman will have a “limited” impact on local financial markets, Korea’s Financial Services Commission said today, noting that the nation’s financial companies at the end of last year held $350 million of securities issued by Goldman. The won rose for the first time in three days, climbing 0.2 percent to 1,115.30 per dollar.

SEC Suit

The SEC on April 16 accused Goldman Sachs, the most profitable company in Wall Street history, of creating and selling collateralized debt obligations in 2007 tied to subprime mortgages without disclosing that hedge fund Paulson & Co. helped pick the underlying securities.

The yen fell ahead of reports forecast to show German investor confidence improved and sales of U.S. existing homes increased. New Zealand’s dollar dropped after consumer prices gained less than economists estimated, backing speculation the nation’s interest rates will stay at a record low.

The yen was at 124.72 per euro in Tokyo from 124.64 in New York yesterday, when it touched 123.16, the highest since March 26. It dropped to 92.57 per dollar from 92.40. The New Zealand dollar fell 0.2 percent to 70.95 U.S. cents.

Underlying Theme

“As long as the global economic recovery remains on track, stocks will rise and cross currencies should advance against the yen,” said Daisaku Ueno, a president at Gaitame.Com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company. “That’s an underlying theme.”

The cost of protecting Asia-Pacific corporate and sovereign bonds from default declined. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan dropped 3 basis points to 94 basis points, while the Markit iTraxx Australia index retreated by 3 basis points to 81.5, Deutsche Bank AG prices show. The Markit iTraxx Japan index fell 0.5 basis point to 88.5 basis points, according to Morgan Stanley prices.

Commodities advanced. Copper for three-month delivery was up 0.5 percent at $7,735 per metric ton, rubber for September delivery increased 2.2 percent to 320 yen per kilogram and July corn gained 0.8 percent to $3.60 a bushel.

Crude oil rose from a three-week low on speculation a report tomorrow will show U.S. stockpiles declined for a second week and as rising equity prices buoyed investor sentiment. Oil climbed 77 cents to $82.08 a barrel in New York, reversing yesterday’s slump.