May 2 (Bloomberg) -- Canon Inc., Japan's biggest office equipment maker, rose the most in a week in Tokyo trading after the company said it plans to spend $600 million in the U.S. to expand laser-printer cartridge production.

Canon gained 3.1 percent to close at 5,400 yen on the Tokyo Stock Exchange, the largest increase since April 25. The benchmark Nikkei 225 Stock Average rose 2.1 percent, helping pare its decline this year to 8.2 percent.

``The overall stock market is on the mend, so the shares are sensitive to news investors might consider to be positive,'' said Keita Wakabayashi, a Tokyo-based analyst at Mito Securities Co. ``The plan reflects Canon's strategy of locating production facilities close to where the consumers are'' to cut costs.

Tokyo-based Canon will build a new 700,000 square-foot (65,000 square meters) factory to produce cartridges in Hampton Roads, Virginia, according to a release distributed on Business Wire. The new plant will help create more than 1,000 jobs, the press release said.

Profit at the business machines division, which includes laser printers, rose 7.6 percent in the first quarter to March 31, Canon reported on April 24. The unit accounted for 68 percent of total sales in the period.

Mito's Wakabayashi has a ``neutral'' rating on Canon.

To contact the reporter on this story: Gregory Turk in Tokyo at gturk2@bloomberg.net; Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

Last Updated: May 2, 2008 02:21 EDT