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Nikkei Rises to Two-Week High on U.S. Confidence, Earnings; Canon Surges

The Nikkei 225 Stock Average rose to the highest level in more than two weeks after U.S. consumer confidence gained and companies including Daihatsu Motor Co. reported earnings that beat forecasts.

Canon Inc. (7751), which has lost 11 percent this year, jumped after Nomura Holdings Inc. said the camera maker’s growth prospects are “positive” even after last month’s record earthquake and tsunami damaged supply chains. Daihatsu, an automaker majority owned by Toyota Motor Corp. (7203), leapt 6.5 percent. Fanuc Corp. (6954) advanced 3.6 percent after the maker of factory robots forecast a 22 percent gain in first-half profit.

“The U.S. economy is recovering and corporate earnings are strong,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “More and more manufacturers are resuming operations at factories. That’s positive for stocks.”

The Nikkei rose 1.4 percent to 9,691.84 at the 3 p.m. close of trading in Tokyo, the highest since April 11. The broader Topix index gained 0.8 percent to 839.87, paring gains of as much as 1.3 percent after Standard & Poor’s cut the country’s sovereign-rating outlook, citing the cost of rebuilding from last month’s disaster.

The Topix has lost 9.8 percent since a magnitude-9 earthquake and tsunami on March 11 devastated Japan’s northeast coast, crippling a nuclear power plant, and disrupting production at companies from Toyota to chipmaker Renesas Electronics Corp. (6723) Some 26,000 people are dead or missing.

Reconstruction Costs

S&P cut Japan’s debt outlook to “negative” from “stable,” saying reconstruction costs are likely to add to a government debt that is already the largest among developed countries. S&P predicted rebuilding will cost as much as 50 trillion yen ($613 billion).

Canon jumped 7 percent to 3,740 yen, even after the company cut its annual profit forecast by 29 percent. Nomura analyst Tetsuya Wadaki said in a report yesterday that the worst is over for the camera maker and high dividend yields along with the mid-term growth outlook for single-lens reflex models make shares attractive.

In the U.S., the Conference Board’s index of consumer confidence rose to 65.4 in April from a revised 63.8 reading in March, figures from the New York-based private research group showed yesterday. The median forecast of economists surveyed by Bloomberg News projected an advance to 64.5.

Daihatsu, Kuraray

Federal Reserve policy makers began two days of meetings yesterday, and will likely say they’ll complete a second round of scheduled bond purchases worth $600 billion through the end of June to help sustain the recovery. Fed Chairman Ben S. Bernanke hold his first press conference after the policy decision.

Companies including Daihatsu and chemical-maker Kuraray Co. jumped after reporting earnings. Daihatsu climbed 6.5 percent to 1,221 yen. The automaker said net income rose to 52.6 billion yen in the year through March, exceeding the company’s forecast by 19 percent.

Kuraray surged 11 percent to 1,178 yen after reporting full-year profit rose 76 percent to 28.7 billion yen.

Fanuc climbed 3.6 percent to 13,260 yen. The company said net income will increase 22 percent in the April-September period. The projection is “positive” because the maker of robots and control systems for machine tools tends to be conservative in its forecasts, Goldman Sachs Group Inc. said in a report published after the company’s announcement.

Daiwa Securities Group Inc., Japan’s second-largest brokerage, had the biggest drop on the Nikkei. The company posted a loss of 37.3 billion yen for the year ended March 31, compared with a profit of 43.4 billion yen a year earlier. The brokerage cut its dividend payments for the year to 6 yen from 13 yen. The stock tumbled 4.4 percent to 344 yen.

Sony Corp. (6758) fell 2 percent to 2,366 yen after the electronics maker warned customers who use its PlayStation Network that credit-card data and other personal information may have been stolen by a hacker.

To contact the reporters on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.

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