Sept. 15 (Bloomberg) -- Japanese stocks rose, led by energy stocks such as Inpex Corp. and Showa Shell Sekiyu K.K., after oil jumped by the most this month.

``The fact that investors are chasing commodity stocks on the back of higher oil prices, instead of selling stocks outright, suggests that market sentiment is quite strong,'' said Hitoshi Yamamoto who looks after about $1 billion in Japanese equities as the president at Commerz International Management (Japan) Ltd. in Tokyo.

The Nikkei 225 Stock Average added 73.29, or 0.6 percent, to 12,907.54 at 10:37 a.m. in Tokyo. The Topix index gained 5.80, or 0.4 percent, to 1318.15. Nikkei 225 futures for December delivery added 0.4 percent to 12,865 in Osaka and rose 0.4 percent to 12,865 in Singapore.

The Nikkei and the Topix have gained more than 9.5 percent since Aug. 8 when Prime Minister Junichiro Koizumi called elections, which he won by a landslide on Sept. 11, giving him a mandate to sell state assets.

Marc Faber, who oversees about $300 million as managing director of Marc Faber Ltd. in Hong Kong, predicts the Nikkei will climb 40 percent in three years as the government pushes ahead with the breakup of the postal service, releasing $3.2 trillion of savings to banks and insurers.

Oil Stocks Gain

Oil prices surged more than 3 percent, the biggest increase since Aug. 30, after the Energy Department reported a larger-than- expected decline in U.S. inventories. Crude for October delivery jumped $1.98 to close at $65.09 a barrel in New York and recently traded up 0.3 percent at $65.27.

Inpex, Japan's largest oil explorer, jumped 17,000 yen, or 2.1 percent, to 837,000. Showa Shell, the Japanese refiner half owned by Royal Dutch/Shell Group, added 26 yen, or 1.9 percent, to 1,364.

Trading companies also advanced. Mitsubishi Corp. and others are boosting crude oil production amid increased demand, according to a Nihon Keizai newspaper report. Mitsubishi, Japan's biggest trading house, added 16 yen, or 0.8 percent, to 1,923. Mitsui & Co., the second biggest, added 5 yen, or 0.4 percent, to 1,191.

Sumitomo Metal Industries Ltd. led gains by steelmakers after Nikkei Financial Daily reported Japanese steelmakers, along with machinery and trading companies, have the best industry earnings outlook in Japan.

The Topix Iron & Steel Index jumped 2.1 percent, making it the best performer among the 33 industry groups that make up the Topix. Sumitomo Metal, the world's largest maker of high-grade steel pipes used in oil production, jumped 9 yen, or 3.2 percent, to 292. Nippon Steel Corp., Japan's biggest steelmaker, advanced 8 yen, or 2.4 percent, to 344.

Mitsubishi Gas Chemical Co., the world's third-largest methanol maker, jumped 28 yen, or 4 percent, to 727 after the Nihon Keizai newspaper said the company may report record operating profit that beats its own forecast for this business year on increasing sales of chemicals and electronic materials.

-- With reporting by Darren Boey in Hong Kong. Editors: Annells, M. Scott.

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net.

Last Updated: September 14, 2005 21:49 EDT