Oct. 7 (Bloomberg) -- Japanese stocks rose, lifting the Topix index to its biggest gain in a month, after rising prices for metals and oil drove up resource-linked shares.

Mitsubishi Corp., a trading company that gets 39 percent of its sales from commodities, added 5.7 percent. Sumitomo Metal Mining Co., Japan’s top gold producer, advanced 5.4 percent after prices for the metal climbed to a record. Sumitomo Mitsui Financial Group Inc., Japan’s third-biggest listed bank, jumped 7 percent after Nomura Holdings Inc. boosted its share-price estimate on the bank, saying it’s “hungry” for profits.

The Nikkei 225 Stock Average rose 1.1 percent to close at 9,799.60 in Tokyo. The broader Topix index added 1.6 percent to 885.69, the steepest gain since Sept. 10. More than three times as many shares advanced as declined.

“Commodities are priced in dollars and a weak U.S. currency inevitably raises their prices,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “Continued excess liquidity in the U.S. is raising concerns about the dollar’s further depreciation and inflation.”

The dollar has weakened against all 16 of the world’s major currencies this year as the U.S. Federal Reserve pumped trillions of dollars into the economy. M1 money supply, which includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks, stayed at $1.64 trillion in the week ended Sept. 21, the latest data available. That’s close to the record $1.68 trillion reached on Aug. 3.

Banks Advance

Today marks the second day of advances for the Nikkei and Topix after three consecutive declines. Shares on the Nikkei trade at 42.2 times estimated net income for this year, higher than the 17.5 times for the Standard & Poor’s 500 Index in the U.S. Alcoa Inc., the biggest U.S. aluminum producer, kicks off the S&P’s third-quarter earnings season today.

Mitsubishi, Japan’s largest trading house by market value, added 5.7 percent to 1,861 yen. Sumitomo Metal increased 5.4 percent to 1,532 yen. Gold futures climbed as much as 2.7 percent to a record $1,045 an ounce in New York yesterday, and copper progressed for a second day with a 2.1 percent gain.

Sumitomo Mitsui Financial jumped 7 percent to 3,380 yen, and Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, climbed 5.1 percent to 499 yen. Banks as a group increased the most since May 15 and were today’s biggest contributors to the advance in the Topix index.

No Picture of Growth

Nomura raised its price estimate on Sumitomo Mitsui by 8.9 percent to 4,900 yen, saying it had begun to cut costs to boost profit. The brokerage highlighted Mitsubishi UFJ’s “strong” financial health.

Aeon Co., Japan’s largest supermarket retailer, retreated 1.1 percent to 821 yen, the lowest close since July 16. The company posted a first-half net loss as Japan’s deepest postwar recession cut demand for clothes and food. J. Front Retailing Co., scheduled to release its results on Oct. 13, sagged 2.2 percent.

“The biggest problem for Japan’s stock market is that investors can’t paint a picture of growth” for the nation’s domestic demand, said RBC’s Takeda. “I can’t be bullish on Japanese equities.”

TDK Corp., which makes electronic components, jumped 5.3 percent to 4,940 yen, the biggest contributor to the Nikkei’s advance. Mizuho Securities Co. boosted its rating on the stock to “strong buy” from “hold,” saying higher sales of batteries and parts for hard disks will boost profit even if the dollar trades at 90 yen. The Japanese currency has averaged 94.74 per dollar this year.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Last Updated: October 7, 2009 03:04 EDT