Dec. 2 (Bloomberg) -- Japanese stocks rose, with benchmarks having their biggest gain in almost three weeks. Exporters such as Canon Inc. and Toyota Motor Corp. gained after oil prices had the biggest decline in three years, easing concern energy costs will crimp consumer spending.

Exporters also advanced after the U.S. government reported that consumer spending accelerated in October and a survey showed U.S. factories received more orders last month.

``Optimism about U.S. consumer spending is spreading with declining oil prices and good economic data,'' said Makoto Sakuma, who holds Toyota and Canon shares among the $3.9 billion he helps manage at Asahi Life Asset Management Co. in Tokyo. ``Exporters are being bought as confidence in the market improves.''

The Nikkei 225 Stock Average added 188.82, or 1.8 percent, to 10,973.07 at the 3 p.m. close in Tokyo. The broader Topix index climbed 18.02, or 1.7 percent, to 1105.38, with carmakers and technology stocks contributing to more than a quarter of the gain. Both benchmarks had their biggest advance since Nov. 15.

Crude oil for January delivery fell $3.64, or 7.4 percent, to $45.49 a barrel in New York. Futures had their biggest drop in dollar terms since tumbling $3.96 on Sept. 24, 2001, after the U.S. government said heating oil inventories increased last week.

The U.S., where Japan sells almost 30 percent of its exports, uses more than a quarter of the world's oil. Japan imports almost all of its oil. Crude recently traded at $45.53 in Asian trading, and has slumped 18 percent since reaching a record $55.67 on Oct. 25.

Oil Price Relief

Every 10 percent increase in oil will cut current profit, or pretax profit from operations, of companies with more than 1 billion yen ($9.8 million) in capital by 1.7 percent, according to the Daiwa Institute of Research.

``A decline in oil prices will relieve the market and bring back some confidence,'' said Yutaka Miura, an equity manager at Shinko Securities Co. in Tokyo. ``Any piece of good news would provide some buying opportunity.''

The drop in oil along with the economic reports, which lifted the Standard & Poor's 500 Index to the highest since Aug. 7, 2001, overshadowed a slump in the dollar. The U.S. currency weakened to as low as 102.15 yen from 102.58 in New York. It recently traded at 102.16 yen, compared with 102.01 on Nov. 26, the weakest in almost five years.

`Incentive to Buy'

Consumer spending rose 0.7 percent in October following a 0.6 percent gain in September, the Commerce Department said. Meanwhile, the Institute for Supply Management's factory index rose to 57.8 last month, the first increase since July, from 56.8 in October. Economists in a Bloomberg News survey expected 57.

These figures, along with lower oil prices, may ease investors' concerns that holiday sales in the U.S., the world's largest economy, will be lackluster, said Kenji Kobata, a manager at Ace Securities in Tokyo.

``Lower oil prices and good economic numbers from the U.S. provide an incentive to buy exporters,'' he said.

Canon, the world's largest seller of digital camera, jumped 120 yen, or 2.4 percent, to 5,200. Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, climbed 220 yen, or 2.9 percent, to 7,770. The company gets more than two-thirds of its sales from overseas.

Toyota, Asia's biggest automaker, gained 60 yen, or 1.6 percent, to 3,870. The company gets 70 percent of its operating profit from North America. Nissan Motor Co., Japan's No. 2 automaker, advanced 23 yen, or 2.1 percent, to 1,101. The company generates 80 percent of its operating profit from North America.

The carmakers led U.S. sales gains for Asian automakers last month, Autodata Corp. figures showed yesterday. Toyota's sales rose 4.4 percent from a year earlier and Nissan's gained 26 percent.

Oil Companies

Meanwhile, oil-related companies declined on concern that lower oil prices will squeeze their profit margins.

AOC Holdings Inc., formed by the 2003 merger of Arabian Oil Co. and Fuji Oil Co., lost 55 yen, or 4.4 percent, to 1,189. Cosmo Oil Co., the nation's No. 5 refiner, slid 7 yen, or 2.3 percent, to 295. Teikoku Oil Co., the country's largest publicly traded natural-gas producer, fell 2 yen, or 0.4 percent, to 551.

Yamanouchi Pharmaceutical Co., the maker of the bestselling incontinence treatment Harnal, added 60 yen, or 1.6 percent, to 3,790. The drugmaker has received conditional U.S. approval for a drug to treat patients with low levels of sodium in the blood.

Misawa Homes Holdings Inc. surged 25 yen, or 9.1 percent, to 301. Toyota may acquire as much as 10 percent of Misawa Homes, the Nihon Keizai newspaper reported, without saying where it obtained the information. Toyota is considering investing in Misawa Homes on condition that the company will ask for help from the government's corporate bailout agency, the newspaper said.

Nikkei 225 futures expiring in December advanced 1.9 percent to 10,990 in Osaka and Singapore. Some 1.14 trillion yen ($11.2 billion) in shares traded on the Tokyo Stock Exchange's first section, 5 percent more than the three-month daily average. Seven stocks rose for every one that fell.

 Advantest Corp. (6857 JT)
 AOC Holdings Inc. (5017 JT)
 Canon Inc. (7751 JT)
 Cosmo Oil Co. (5007 JT)
 Misawa Homes Holdings Inc. (1722 JT)
 Nissan Motor Corp. (7201 JT)
 Teikoku Oil Co. (1601 JT)
 Toyota Motor Corp. (7203 JT)
 Yamanouchi Pharmaceutical Co. (4503 JT)

To contact the reporter on this story: Neha Kumar in Tokyo at nkumar2@bloomberg.net.

Last Updated: December 2, 2004 01:34 EST