Nov. 20 (Bloomberg) -- Japan’s Topix index climbed in the final minute of trading, led by financial stocks after this week’s drops made them attractive to some investors. It was the index’s first increase in eight days.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by market value, rose 1.1 percent. Sumitomo Mitsui Financial Group Inc. gained 3.5 percent in its first advance this week. T&D Holdings Inc. added 5.7 percent after the insurance company reported increased profit. Advantest Corp., the world’s biggest maker of memory-chip testers, lost 2.9 percent after Merrill Lynch & Co. cut its outlook on the global semiconductor industry.

“Financial stocks rebounded on technical reasons, as they are relatively cheap,” said Yasuhiko Hirakawa, a fund manager at DIAM Co., which manages the equivalent of $103 billion.

The Topix index added 0.1 percent to 838.71 at the 3 p.m. close of trading in Tokyo, reversing a slump of 0.9 percent and ending seven days of declines. About eight shares rose for every seven that fell. The Nikkei 225 lost 0.5 percent to 9,497.68.

For the week, the Topix dropped 3.2 percent and the Nikkei sank 2.8 percent, their sharpest decreases in seven weeks.

Brokerages, consumer lenders and banks each fell more than 7 percent in the first four days of this week, the biggest declines among the Topix’s 33 industries. Stocks in the Topix trade at an average of about 1 time book value, the cheapest since April, according to data compiled by Bloomberg.

Banks Rebound

Mitsubishi UFJ added 1.1 percent to 471 yen, rebounding from a 3.7 percent slump yesterday, when it was the Topix’s biggest drag on plans to sell as much as 1 trillion yen ($11.3 billion) in securities. That spurred concern more banks will sell stock and dilute the value of existing shareholdings.

Sumitomo Mitsui climbed 3.5 percent to 2,815 yen, today’s biggest boost to the Topix following a four-day, 16 percent retreat. Nomura Holdings Inc., Japan’s largest brokerage, rose 3.1 percent to 603 yen after yesterday’s 4.9 percent drop. The three companies were Japan’s most traded stocks by value.

“Bank shares were bought back to close out short positions, though there’s no reason to buy them back in terms of fundamentals,” said Kenichi Hirano, general manager at Tokyo- based Tachibana Securities Co.

Short selling is when investors borrow shares to sell them in a bet that prices will fall and that they’ll be able to buy back the shares more cheaply to profit from the difference.

The Topix has fallen 2.4 percent this year, the only decline among the world’s 40 largest equity markets, according to data compiled by Bloomberg. That compares with increases of 23 percent for the Standard & Poor’s 500 Index in the U.S. and 26 percent for the Dow Jones Stoxx 600 Index in Europe. The global recession has sapped demand for Japanese companies’ products and the stronger yen has hurt exporters.

Rates Near Zero

The Bank of Japan today kept interest rates near zero and raised its economic assessment even as government pressure for it to fight deflation intensified.

The Topix fell for most of the day, after the lower outlook for the semiconductor industry by Bank of America Corp.’s Merrill Lynch unit and as oil prices retreated.

Advantest, lost 2.9 percent to 2,030 yen. Tokyo Electron Co., the world’s second-biggest maker of semiconductor equipment, retreated 3 percent to 4,860 yen. Sumco Corp., which makes silicon wafers, declined 2.4 percent to 1,538 yen.

Chip stocks also fell after Dell Inc., the world’s third- biggest maker of personal computers, posted profit that missed analysts’ estimates.

Inpex Corp., Japan’s largest oil explorer, lost 3 percent to 712,000 yen, a three-month low. Oil companies dropped the most among the 33 industry groups in the Topix after crude oil for December delivery retreated for the first time in four days yesterday, plunging 2.7 percent to $77.46 a barrel in New York.

Mitsubishi Chemical Holdings Corp. jumped 9.2 percent to 321 yen, the biggest advance in the Nikkei, after Nomura boosted the chemical company to “buy” from “neutral.”

T&D Holdings climbed 5.7 percent to 2,215 yen, the steepest gain in six weeks. Japan’s largest publicly traded life insurer said net income for the half year ended Sept. 30 rose to 14.4 billion yen from 3.7 billion yen a year earlier.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

Last Updated: November 20, 2009 03:45 EST