Nov. 28 (Bloomberg) -- Japan stocks rose, capping their best weekly gain in a month, on expectations governments will take more steps to pull the global economy out of recession.

Mitsubishi Corp. and Mitsui & Co., Japan’s biggest trading companies, surged a second day, bringing their weekly gain to more than 12 percent, on speculation commodities prices will pick up after China cut interest rates. Kyocera Corp., the world’s No. 4 maker of solar cells, soared 17 percent after saying it would buy back shares. Panasonic Corp. tumbled 11 percent as slumping global demand and falling prices prompted the world’s biggest electronics maker to slash its net income target 90 percent.

The Nikkei 225 Stock Average added 138.88, or 1.7 percent, to close at 8,512.27 in Tokyo. The broader Topix index rose 5.79, or 0.7 percent, to 834.82 after swinging between gains and losses at least eight times. The Nikkei had a 7.6 percent gain this holiday-shortened week, while the Topix rose 4 percent, the best weekly climb for both gauges since the period ending Oct. 31.

“Investor sentiment is drifting between perception and reality,” said Hideo Arimura, who oversees about $1.9 billion at Mizuho Asset Management Co. in Tokyo. “Metals and crude have been oversold. Stimulus measures in the U.S. and China will probably help commodities stage a modest rally.”

The Nikkei lost 0.8 percent in November for a sixth-straight monthly drop, the longest losing streak on record for the gauge going back to 1970. U.S. markets were closed yesterday for the Thanksgiving holiday.

Fed Meeting

Credit losses and writedowns at financial companies have neared $1 trillion worldwide, spurring central banks and governments to cut rates and spend more to stimulate economies. The People’s Bank of China on Nov. 26 reduced its benchmark lending rate by the most in 11 years, while the European Union proposed a 200 billion euro ($259 billion) spending package, joining Japan, China and the U.S. in crafting stimulus plans.

The Federal Reserve meets Dec. 16 and may cut key lending rates to 0.75 percent from 1 percent, based on the median of 69 estimates in a Bloomberg survey. The U.S. central bank pledged $800 billion this week to help ease the credit crisis.

Mitsui, which gets more than half its earnings from commodities, climbed 8.3 percent to 846 yen, bringing its weekly gain to 12.4 percent. Larger rival Mitsubishi added 6.3 percent to 1,185 yen, adding 13.7 percent since Nov. 21. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore carriers, rose 6.1 percent to 507 yen. Sumitomo Metal Mining Co., Japan’s No. 2 copper smelter, surged 11 percent to 908 yen, the highest since Oct. 3

China Railways

Crude has tumbled 64 percent from a record $147.27 a barrel on July 11, while the London Metal Exchange Index of six metals has dropped by a half in the same period. A $1 drop in a barrel of crude cuts Mitsui’s annual net income by 2 billion yen ($21 million), while $1 change in a pound of nickel alters profit by 1.2 billion yen, the company said on Nov. 7.

Nippon Steel Corp., the world’s second-largest steelmaker, jumped 5.3 percent to 297 yen, while Komatsu Ltd., which counts China as its fastest growing market, climbed 6.9 percent to 1,144 yen. Kawasaki Heavy Industries Ltd., which makes Japanese bullet trains, advanced 6.8 percent to 204 yen.

China’s Ministry of Railways will double investment in the nation’s train system next year, the Nikkei newspaper said today. The project will require 20 million tons of steel and 120 million tons of cement, the Japanese-language newspaper said.

“If China increases railway investments, it will boost demand and prices for commodities,” said Jyusaku Matsuo, a Tokyo-based analyst at Mito Securities Co.

Share Buybacks

Kyocera, an electronics component maker, soared 17 percent to 5,960 yen, posting the steepest climb on the MSCI World Index. The company yesterday said it will buy back up to 4.2 percent of its outstanding shares. Speaker and microphone maker Foster Electric Co. rose 16 percent, the most since May 2002, to 726 yen, after announcing its own buyback.

Panasonic sank 11 percent to 1,144 yen. The company said business conditions were “deteriorating sharply” when it yesterday reduced annual targets for sales, operating profit and net income. Nomura Securities Co. cut its ratings on Panasonic to “neutral” from “buy.”

“There is doubt on whether businesses can achieve their profit forecasts, even those they’ve already lowered,” said Hiroshi Sato, chief investment officer of GCSAM Co., a Tokyo- based fund manager. “Investors are too scared to buy in.”

The Topix has rebounded 12 percent since dropping to the lowest level in 24 years on Oct. 27. Softbank Corp., the nation’s third-largest wireless operator, led gains in that period, doubling its value. Oriental Shiraishi Corp., a civil engineering company that filed for bankruptcy protection on Nov. 26, was the worst performer, plunging 96 percent. Four of the 10 biggest losers were real estate or construction companies.

Nikkei futures expiring in December added 1.8 percent to 8,520 in Osaka and gained 1.5 percent to 8,490 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

Last Updated: November 28, 2008 03:18 EST