June 12 (Bloomberg) -- Japanese stocks rose, pushing the Nikkei 225 Stock Average above 10,000 for the first time in eight months, as a recovery in the equity market spurred speculation brokerages’ earnings will improve.

Nomura Holdings Inc., the nation’s biggest securities company, jumped 5.2 percent after Merrill Lynch & Co. recommended buying the stock. Aeon Co., Japan’s largest supermarket operator, leapt 8.3 percent on expectations consumer spending will rise. Kawasaki Kisen Kaisha Ltd. led an afternoon rally in shipping lines as China’s factory output and retail sales increased more than estimated.

The Nikkei 225 Stock Average climbed 154.49, or 1.6 percent, to 10,135.82 in Tokyo, marking the first close above 10,000 since Oct. 7. The broader Topix index rose 9.89, or 1.1 percent, to 950.54. For the week, the Nikkei added 3.8 percent, and the Topix gained 3.7 percent.

“The rebound in the stock market is helping increase fee revenue at brokerages and is easing investor concern valuation losses will balloon at financial companies,” said Masaru Hamasaki, a Tokyo-based senior strategist at Toyota Asset Management Co., which oversees the equivalent of $15 billion. “Various economic indicators point to an improvement in consumer confidence.”

The trading volume of the Tokyo Stock Exchange’s main board swelled to 3.997 billion shares, the second-highest level on record. The biggest volume was recorded on Nov. 8, 2005, when it reached 4.558 billion shares, according to Bloomberg Data.

Brokerages, Retailers

Nomura surged 5.2 percent to 917 yen. Merrill Lynch boosted its rating on the stock to “buy” from “neutral,” saying a “significant” increase in trading volume and investment-trust sales will help the company post a profit in the next fiscal year. Closest rival Daiwa Securities Group Inc. climbed 4.1 percent. A gauge of securities companies posted the steepest climb among 33 industry groups on the Topix.

Aeon jumped 8.3 percent to 996 yen, the third-biggest winner on the MSCI World Index. Seven & I Holdings Co., the nation’s largest convenience store operator, advanced 4.6 percent. Japan’s consumer confidence improved for a fifth month in May, the Cabinet Office said.

Kawasaki Kisen soared 3.2 percent, while market leader Nippon Yusen K.K. jumped 2.2 percent. China’s statistics bureau said today industrial output grew 8.9 percent and retail sales jumped 15.2 percent in May. Economists had predicted growth rates of 7.7 percent and 15 percent, respectively.

China’s Economy

“Shipping lines heavily depend on China and the country’s improved economic indicators spurred investors to buy these shares,” said Hiroshi Fujimoto, a fund manager at Tokyo-based Shinkin Asset Management Co. in Tokyo, which manages the equivalent of $5.7 billion. “The rally in shippers also reflects a possible further increase in transport fees.”

Yesterday, the Baltic Dry Index, a measure of commodity cargo costs, rose for the first time in six days in London. The gauge is more than four times higher than the level at the beginning of this year.

The Topix advanced for a third week, bringing its rally from a 25-year low on March 12 to 36 percent. Companies on the index traded at an average 1.21 times book value yesterday, a level not seen since Oct. 1, according to Nikkei Inc.

“Valuations are rising, meaning investors’ expectations are way ahead of reality and the market is reflecting all possible good news,” said Toyota Asset’s Hamasaki. “If the global economy doesn’t recover in the second half, the market should be corrected, which will eliminate all green shoots.”

Nikkei futures expiring in September added 1.5 percent to 10,170 in Osaka and Singapore.

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

Last Updated: June 12, 2009 03:52 EDT