March 18 (Bloomberg) -- Japanese stocks rose, led by finance companies, after the Nihon Keizai newspaper reported Mitsubishi Tokyo Financial Group Inc. may increase its stake in Acom Co., the nation's second-largest consumer loans company.

Japan's Nikkei 225 Stock Average added 0.4 percent to 11,484.28 at the close in Tokyo. The broader Topix index climbed 0.4 percent, led by the non-bank lenders index, which climbed 4.1 percent.

Japanese stocks are among the best performing in the region this year in local currency terms, lagging gains only by indexes in China, Taiwan, Sri Lanka and Malaysia. The Topix has advanced 9.8 percent in 2004 amid optimism that last year's export-led recovery is boosting employment and feeding an expansion in consumer spending, retailing and bank lending.

``Consumers are spending more, and that's made investors more optimistic about Japanese stocks and the economy,'' said Hiroshi Uchida, who helps manage $17 billion at UFJ Partners Asset Management Co. in Tokyo. Uchida said he may increase his holdings in bank stocks, especially those of smaller lenders.

Elsewhere in Asia, Taiwan's TWSE Index, which had its biggest gain in seven months, led the advance among the region's benchmarks. All indexes rose except those in Australia, New Zealand, India, Sri Lanka, Hong Kong and China.

The Morgan Stanley Capital International Asia-Pacific Index, which is measured in dollars, climbed 1.2 percent, making it the second-best index among the national benchmarks measured in local currencies in the region. It rose as the yen climbed 1.1 percent against the dollar, boosting the value of its Japanese members, which account for three-fifths of its value.

China IPO

The Hang Seng China Enterprises Index sank 2.7 percent amid concern that demand for Chinese shares traded in Hong Kong is waning after the index surged 152 percent in 2003. Semiconductor Manufacturing International Corp., China's first chipmaker to sell shares publicly, slid in its Hong Kong stock-market debut.

Japan's Acom jumped 13 percent to 8,490 yen. Mitsubishi Tokyo climbed 2.2 percent to 944,000 yen. The lender may pay 100 billion yen ($923.2 million) to buy a 15 percent stake in Acom, the Nihon Keizai said. Mitsubishi Trust & Banking Corp., a unit of the lender, owns 2.2 percent of Acom, Bloomberg data shows. Mitsubishi Tokyo wants to expand an alliance with Acom to boost its consumer business and has yet to make a decision, the bank said in a statement.

Japan's largest banks plan to boost credit-card and consumer lending to return to profit after $163 billion of bad loans and a seven-year slump in corporate borrowing led to record losses last business year. Shares of other consumer lenders surged on speculation that similar tie-ups might follow.

Japanese Banks

``The one and only way now for Japanese banks to improve their profit is to strengthen their consumer loan businesses,'' said Akira Mizobuchi, a bank analyst at Nomura Holdings Inc. who raised his recommendation for Mitsubishi Tokyo today.

Takefuji Corp., Japan's third-largest consumer finance company by revenue, climbed 3.2 percent to 8,100 yen. Promise Co., Japan's fourth-largest consumer finance company, jumped 6.6 percent to 7,580 yen. Chiba Bank Ltd., a regional bank based in Chiba prefecture, climbed 11 percent to 579 yen. Bank of Yokohama Ltd. soared 9.7 percent to 598 yen.

The Topix Other Finance Index, with tracks 29 non-bank financial companies, has surged 45 percent this year, leading the Topix's 33 industry groups, amid optimism economic expansion will result in fewer debt defaults.

Japan's economy added jobs for the second month in January, the government said last month. Gross domestic product grew at the fastest pace in 13 years during the final quarter of 2003. Household spending rose for the first time in five months and retail sales had the biggest increase in almost seven years in January.

Taiwan's Election

Personal bankruptcies in Japan in December fell 1 percent from a year earlier to 21,682 cases, according to the Supreme Court of Japan. Defaults by individuals fell 12 percent to 17,207 cases in November.

Taiwan's TWSE jumped 3.2 percent to 6787.03 on optimism Lien Chan, who has promised to improve relations with China and open direct transportation links, will win Saturday's election.

Companies with investments in China, such as Uni-President Enterprises Corp. and China Motor Co., advanced.

Uni-President Enterprises, Taiwan's biggest food company and one of the largest instant noodle suppliers in China, gained 6.6 percent to NT$20.90. China Motor, which has a car-making venture with the government of Fujian province in southeast China, rose 2.1 percent to NT$72.50.

China's Semiconductor Manufacturing slumped 9 percent to HK$2.48 in its debut on the Hong Kong Stock Exchange. The company raised HK$14 billion ($1.8 billion) from its Hong Kong initial public offer to fund expansion.

Some investors say demand for shares has been sapped by Chinese companies' plans to sell more than $15 billion of stock overseas this year, following $6 billion in sales last year.

South Korean Lenders

The sales to come are ``going to dampen investor appetite,'' said Anthony Muh, chief investment officer for Citigroup Asset Management in Hong Kong, which manages $16 billion in equities in Asia. ``Some demand will taper off.''

South Korean lenders gained after some analysts recommended investors buy their shares because of improving profit prospects in an economy the government forecasts to grow 6 percent this year. The country's jobless rate was unchanged in February at its lowest in almost a year, the government said today.

Kookmin, the country's biggest lender, rose 1.5 percent to 47,200 won, adding to yesterday's 5.1 percent surge. Hana Bank, the fourth-largest, climbed 1.9 percent to 26,500 won.

Banks may outperform the Kospi from the first quarter as earnings will recover on reduced provisions for bad loans, said Kwon Jae Min, a banking analyst at Good Morning Shinhan in Seoul. He raised the industry to ``overweight'' from ``neutral'' and recommended Kookmin and Hana.

Westpac Bank

Morgan Stanley yesterday said the South Korean financial services industry is ``attractive.'' Goldman Sachs Group Inc. earlier this week raised its 12-month share-price forecast for Kookmin, Hana and Shinhan Financial Group Ltd.

Commonwealth Bank of Australia and Westpac Banking Corp. led Australian lenders lower after Citigroup Inc. cut its recommendation on the two to ``hold 2'' from ``buy 1.''

Commonwealth Bank, Australia's second-biggest lender, shed 0.9 percent to A$32.85. Westpac, the nation's fourth-biggest bank, fell 1.4 percent to A$17.99.

Pakistan's benchmark stock index rose to 5000 points for the first time on government expectations that economic growth will exceed forecasts.

Pakistan's $60 billion economy may expand 5.5 percent to 6 percent in the year to June 30, the most since 1996, the government said on Sunday. Pakistan had previously forecast growth of 5.3 percent after a 5.1 percent expansion in the previous 12 months.

Shares of National Bank of Pakistan Ltd., the country's largest lender by assets, rose 0.3 percent to 58.2 rupees.

Acom Co. (8572 JP)
Bank of Yokohama Ltd. (8332 JT)
China Motor Co. (2204 TT)
Chiba Bank Ltd. (8331 JT)
Commonwealth Bank (CBA AU)
Hana Bank (002860 KS)
Kookmin Bank (060000 KS)
Mitsubishi Tokyo Financial Group Inc. (8306 JP)
National Bank of Pakistan Ltd. (NBOP PA)
Promise Co. (8574 JP)
Semiconductor Manufacturing International Corp. (981 HK)
Takefuji Corp. (8564 JP)
Uni-President Enterprises Corp. (1216 TT)
Westpac Banking Corp. (WBC AU)

To contact the reporters on this story: David Tweed in Sydney at dtweed@bloomberg.net.

Last Updated: March 18, 2004 03:31 EST