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Japanese Stocks Advance the Most in Two Weeks on U.S. Economy, Europe Hope

Japanese stocks rose for a second day, driving up the Nikkei 225 Stock Average by the most in two weeks, after U.S. economic reports and speculation Europe’s debt crisis will be contained boosted confidence in a global recovery.

Canon Inc., which is the world’s biggest camera maker and gets more than 80 percent of its sales abroad, advanced 2.5 percent, as the dollar strengthened against the yen after U.S. payrolls and manufacturing climbed last month. Mitsubishi Corp., Japan’s largest commodities trader, rose 1.3 percent as oil and metal prices increased. Nomura Holdings Inc. led brokerages higher on the prospects of swelling trading profits.

“The macro-economy is improving pretty well,” said Seiichiro Iwamoto, who helps oversee $35 billion in Tokyo at Mizuho Asset Management Co. “The currency market’s stability following the growth in manufacturing is supporting the Japanese stock market.”

The Nikkei 225 jumped 1.8 percent to 10,168.52 at 3 p.m. in Tokyo, the biggest gain since Nov. 18 and the highest close since June 21. The broader Topix index climbed 1.3 percent to 877.21, with more than five shares advancing for each that fell.

The Topix has retreated 3.3 percent this year, compared with gains of 8.2 percent by the Standard & Poor’s 500 Index in the U.S. and 5.2 percent by the Stoxx Europe 600 Index. Shares in the Japanese benchmark are valued at 15.2 times estimated earnings on average, compared with 14.2 times for the S&P 500 and 11.9 times for the Stoxx 600.

‘Sign of Optimism’

Japanese capital spending, excluding software, rose 4.8 percent in the three months ended Sept. 30 from a year earlier, the Finance Ministry said today. While less than the 6 percent median forecast of five economists surveyed by Bloomberg News, it was the first increase since the quarter ended March 2007.

“The market is taking the result positively,” Mizuho Asset Management’s Iwamoto said. “We finally had a sign of optimism in Japan’s capital spending.”

Canon rose 2.5 percent to 4,050 yen and was the biggest single support for the Topix. Honda Motor Co., Japan’s second- biggest carmaker by sales, increased 1.8 percent to 3,135 yen. Advantest Corp., the world’s biggest maker of chip-testing equipment, leapt 5.4 percent to 1,791 yen, the most since July.

The S&P 500 surged yesterday in New York by 2.2 percent, the most since Sept. 1. A report from ADP Employer Services showed businesses added 93,000 workers in November, more than the 70,000 expected by economists, based on the median of estimates compiled by Bloomberg. Separately, the Institute for Supply Management said its factory index, a gauge of manufacturing, held near a five-month high.

Economic Recovery

“An economic recovery in the U.S. will likely precede recovery in Japan,” said Hitoshi Itagaki, president of Principal Global Investors (Japan) Ltd., which manages about 150 billion yen.

The dollar appreciated to 84.40 yen last night in Tokyo, near the highest level since Sept. 27. A stronger dollar boosts the value of U.S. income at Japanese companies when converted into their home currency.

The Stoxx Europe 600 Index jumped 2 percent yesterday, the most since Sept. 1, amid speculation European Central Bank policy makers may step up measures to contain the region’s government-debt crisis.

“We are seeing promising signs in the economy and market sentiment is improving globally,” said Mitsushige Akino, who oversees about $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “Improving market sentiment should boost money flow into risk assets.”

Brokerages, Traders Advance

Brokerages had the second-biggest gain among the Topix’s 33 industry groups on speculation rising stock prices will boost trading revenue and earnings.

Nomura Holdings, Japan’s biggest brokerage, jumped 2.7 percent to 491 yen. Daiwa Securities Group Inc., the No. 2, climbed 2.9 percent to 389 yen. SBI Holdings Inc. leapt 3.2 percent to 11,700 yen.

“If market volume increases, earnings at brokerages and insurance companies should rise,” Iwamoto said.

Mitsubishi rose 1.3 percent to 2,162 yen, the highest close since April 30. Mitsui & Co., which counts commodities as its largest source of profit, gained 1.2 percent to 1,334 yen. Itochu Corp. advanced 2.9 percent to 809 yen.

Crude oil for January delivery jumped 3.1 percent to $86.75 a barrel in New York yesterday, the highest settlement price since Nov. 11. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 2.6 percent yesterday, the most since Nov. 4.

Yahoo Japan Corp., the operator of Japan’s most-visited Internet portal, advanced 2.1 percent to 31,300 yen after the Nikkei newspaper said Japan’s Fair Trade Commission approved a partnership between the company and U.S.-based Google Inc., the world’s most popular Internet-search engine.

Sega Sammy Holdings Inc., a maker of video-game and pachinko machines, surged 5.6 percent to 1,529 yen, the highest in more than three years. The company outlined plans to buy back as much as 5.3 percent of its shares and cancel 6 percent.

To contact the reporter on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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