Japanese Stocks Advance on Limited Damage From 7.1 Magnitude Aftershock

Japanese stocks gained, sending the Nikkei 225 Stocks Average higher for a third consecutive week, on growing speculation damage from yesterday’s 7.1 magnitude aftershock was limited.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest listed lender, gained 3.2 percent. Tokyo Electric Power Co., the operator of a crippled nuclear power plant, surged 24 percent after saying it may cancel scheduled power blackouts this summer. Fast Retailing Co. jumped 7.3 percent after boosting its earnings forecast. Seven & I Holdings Co., owner of the 7-Eleven convenience-store brand, climbed 1.9 percent after reporting net income more than doubled.

The Nikkei 225 gained 1.9 percent to 9,768.08 as of the close of trading in Tokyo after falling as much as 0.6 percent earlier. The measure climbed 0.6 percent this week, its third weekly increase in a row. The benchmark gauge has fallen about 6.4 percent since March 10, a day before a record magnitude-9 earthquake and tsunami struck Japan. The broader Topix index advanced 1.4 percent to 853.13 today, with about seven shares rising for each that fell on the 1,666-member gauge.

“The market initially expected the effects of the aftershock last night to be like the huge earthquake last month,” said Yuuki Sakurai, president at Fukoku Capital Management Inc., which manages the equivalent of $8.6 billion in Tokyo. “But as the day went on they slowly realized it wasn’t as bad. Considering the strength of the magnitude, the damage wasn’t that much, which is being seen as positive.”

U.S. Futures

Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. U.S. stocks fell yesterday, dragging the Dow Jones Industrial Average down from an almost three-year high, following the earthquake in Japan and a dispute over the federal budget threatened to shut down the U.S. government.

The Nikkei 225 (NKY) posted its biggest two-day plunge since the 1987 crash on March 14 and March 15 after the quake and tsunami on March 11 killed or left missing more than 27,000 people and prompted radiation leaks at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear power plant. Shares on the measure now trade at 14.7 times estimated earnings, compared with about 18 times at the start of the year.

The 7.1-magnitude aftershock minutes before midnight yesterday spared the Fukushima plant, although workers struggling to cool radioactive fuel were evacuated, Tepco said, based on its initial assessment. The aftershock was the strongest since the March 11 quake. No unusual conditions were observed at the plant, the utility and Japan’s Nuclear and Industrial Safety Agency said in statements.

‘Acting Calm’

Mitsubishi UFJ Financial gained 3.2 percent to 393 yen, the biggest support to the Topix index today. Mitsubishi Estate Co., the country’s biggest developer by market value, advanced 3.7 percent to 1,389 yen. Komatsu Ltd., Japan’s largest construction machinery maker, increased 2.2 percent to 2,785 yen.

“The market may not have digested everything from the quake last night, but it’s acting calm compared with the March 11 quake,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees $84 billion. “It’s not as big as the March 11 disaster, and the negative effects don’t look as bad.”

Tokyo Electric Power, the operator of the crippled nuclear power plant in Fukushima prefecture, surged 24 percent to 420 yen. The company, also known as Tepco, said it would try to avoid rolling blackouts that were planned for this summer, as its supply may be able to meet demand, the company said.

Removing Uncertainty

“As it was seen to be a squeeze for company earnings in July to September, this has removed some uncertainty,” said Yoshihisa Okamoto, who helps oversee about $34 billion at Tokyo- based Mizuho Asset Management Co. “It helped to push up the market in the afternoon.”

Fast Retailing, the operator of the Uniqlo casual-clothing chain, jumped 7.3 percent to 11,940, the biggest single boost to the Nikkei 225. Net income may total 60 billion yen ($703 million) in the year ending Aug. 31, compared with an earlier forecast for profit of 51 billion yen, the Yamaguchi, Japan- based company said yesterday.

Seven & I Holdings Co., owner of the 7-Eleven convenience- store brand, rose 1.9 percent to 2,112 yen. The retailer said full-year net income more than doubled to 112 billion yen from 44.9 billion yen a year earlier.

“The effects of the earthquake on earnings really depends company to company,” Ishigane said. “Some companies may find they are hardly affected at all.”

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

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

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