Oct. 17 (Bloomberg) -- Japan's Nikkei 225 Stock Average rose, paced by exporters such as Honda Motor Co., after a better-than- expected report on U.S. retail sales and consumer prices eased concern that demand from the world's largest economy will shrink.

``U.S. inflation has been the biggest worry for the market so any sign of that easing gives confidence,'' said Yoshinori Nagano, who helps oversee about $70 billion at Daiwa Asset Management Co. in Tokyo. ``Sustained U.S. growth and inflation under control is going to be crucial for the Japanese market to continue rising.''

The Nikkei gained 17.80, or 0.1 percent, to 13,438.34. at the 11 a.m. break in Tokyo. The Topix index was little changed, adding 0.51 point to 1398.44. Nikkei 225 futures for December delivery gained 0.3 percent to 13,450 in Osaka and climbed 0.4 percent to 13,445 in Singapore.

Limiting gains, Nippon Steel Corp. led declines by steelmakers after the Nihon Keizai newspaper reported over the weekend that Japan's largest steelmaker plans further cuts in steel sheet production to reduce inventories in Japan.

Investors may refrain from taking large bets before industry leaders including Intel Corp. and International Business Machines Corp. report earnings later this week, according to Kenichi Hirano, general manager, at Tachibana Securities Co. in Tokyo.

Intel, the world's biggest chipmaker, is scheduled to report earnings Oct. 18., while IBM, the world's largest maker of computer servers is expected to announce results later today.

About 930 billion yen ($8.2 billion) in shares included in the Topix traded, less than half of the daily average for the past three months. Three shares gained for every two that fell on the Tokyo Stock Exchange's first section.

U.S. Inflation

A U.S. Labor Department report showing core consumer prices, excluding food and energy costs, that rose less than some economists had expected, helped drive U.S. shares higher, with the Standard & Poor's 500 Index adding 0.8 percent.

Excluding autos, retail sales rose 1.1 percent last month, topping the median economists' estimate of 0.8 percent. Total sales at retailers gained 0.2 percent after slumping 1.9 percent in August, the Commerce Department said.

Honda, which is the most dependent on U.S. sales among Japan's top three carmakers, added 230 yen, or 3.5 percent, to 6,790.

Toyota Motor Corp., Japan's largest automaker, climbed 60 yen, or 1.2 percent, to 5,280. A study by industry researcher, Power Information Network, showed it overtook General Motors Corp. and Ford Motor Co. in U.S. retail market share in early October as auto sales plunged following the expiration of U.S. automakers' employee-discount offers.

`Reassuring Signs'

Mitsubishi Motors corp., Japan's fifth-largest automaker, rose 4 yen, or 1.7 percent, to 237. The carmaker will start supplying fuel-efficient gasoline engines to DaimlerChrysler AG for its Smart compact cars as early as next year, the Nihon Keizai reported.

``The U.S. is starting to show some reassuring signs that growth remains intact, and that's one element of comfort for investors to keep buying Japan,'' said Koichi Seki, an equity manager at Chuo Securities Co. in Tokyo.

Nippon Steel, the nation's largest steelmaker, dropped 9 yen, or 2.2 percent, to 394.

The company aims to cut output of steel sheets by about 800,000 tons in the six months ending March 31, after reducing production by 500,000 tons in the six months ended Sept. 30, the newspaper said on Oct. 15.

Steelmakers, Toshiba

Tokyo-based Nippon Steel plans to cut output because the domestic inventory is swelling. Japan's inventory of steel sheet rose in August for a fifth straight month, reaching a four-year high 4.65 million tons, the newspaper said.

Other steelmakers fell. Sumitomo Metal Industries Ltd., the nation's third-biggest maker of the alloy, lost 7 yen, or 1.8 percent, to 380. JFE Holdings Inc., the second largest, slipped 10 yen, or 0.3 percent, to 3,570.

Toshiba Corp., the world's second-largest maker of NAND flash memory chips used in consumer electronics, climbed 4 yen, or 0.8 percent, to 520. The company may post about 40 billon yen in half- year net income, a 20 percent drop for the year, the Nihon Keizai reported. That would double the company's most recent forecast, the report said.

The company earlier this month told Bloomberg News that it expects profit from semiconductors to beat its forecast as it increases production to meet demand.

Nitto Denko, Victor

Nitto Denko Corp., a maker of chemical products used in electronic components such as semiconductors, jumped 250 yen, or 3.9 percent, to 6,620. After the close of the market on Oct. 14, the company said group net income for the six months ended Sept. 30 totaled about 26.2 billion yen, beating its 22.5 billion yen forecast, helped by increased output. It also raised its planned first-half dividend to 30 yen from 25 yen.

In contrast, Victor Co. of Japan Ltd., a maker of audio- visual products, slid 71 yen, or 10 percent, to 628. The company on Oct. 14 said its loss widened almost fourfold to about 16.5 billion yen in the six months ended Sept. 30 on costs to eliminate jobs and falling sales of DVD recorders and other consumer electronics.

In July, the firm forecast a 4 billion yen loss. Victor reversed its full-year forecast to an 11.5 billion yen loss.

Earnings announcements and revisions will be the biggest focus this week, according to Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities Co. in Tokyo.

Among those that are scheduled to announce this week are Hoya Corp., the world's largest supplier of glass plates used in the chipmaking process, and Yahoo Japan Corp., the local unit of the world's most-visited Internet directory.

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

Last Updated: October 16, 2005 22:37 EDT