Feb. 10 (Bloomberg) -- Nissan Motor Co., Japan’s third- largest carmaker, rose the most in a month after the company said yesterday it would cut 20,000 jobs in an effort to return to profit.

Nissan rose 19 yen, or 7.3 percent, to close at 280 yen on the Tokyo Stock Exchange.

The carmaker will slash labor costs in high-wage countries by 175 billion yen ($1.9 billion), or 20 percent, after forecasting its first loss in nine years. Nissan also plans to shift some domestic production overseas to counter a rising yen.

Nissan “is reacting quickly to the crisis,” wrote Shinya Naruse, an auto analyst at Nomura Securities Co. in Tokyo, in a note to investors today. “The labor cost cutting and overseas production shift show the company is moving toward improving profitability.” Naruse raised his rating on the company to “neutral” from “reduce.”

The company may shift production of 130,000 vehicles and 120,000 powertrain units from Japan overseas over the next two fiscal years, said spokeswoman Haruko Wada. The move would alleviate the impact from the stronger yen, which is reducing the value of sales outside of Japan. Wada declined to name specific models or countries of production.

Separately, Nissan’s credit rating was placed under review for a possible downgrade by Standard & Poor’s, the rating company said today in a statement.

“Although Nissan is pursuing various measures to improve cash flow, it remains unclear whether the company will be able to achieve positive free cash flow in fiscal 2009 given the tough market climate,” wrote S&P analyst Chizuko Satsukawa in a report.

S&P rates Nissan’s long-term credit and senior unsecured debt BBB+, three levels above junk, and will resolve the credit review within 90 days.

Nissan’s automotive operations had negative cash flow of 615 billion yen for the nine months through Dec. 31, Satsukawa said.

To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.

Last Updated: February 10, 2009 01:52 EST