Japan Stocks Rise Most in Two Months as Yen Retreats, Production Rebounds

Japanese stocks climbed the most in two months as the yen fell amid optimism the European Union will do more to ease the region’s debt crisis and a report showed Japan’s industrial production is set to rebound.

Mazda Motor Corp., the Japanese carmaker most dependant on European sales, gained 1.5 percent as the euro rose against the yen, boosting the value of repatriated earnings. Sony Corp. (6758), which gets 70 percent of sales overseas, climbed 1.9 percent amid speculation the EU will offer further aid to Greece. Fanuc Corp., a maker of industrial robots, rose 1.8 percent after a Trade Ministry report showed factory production may recover from March’s earthquake disaster as soon as next month.

The Nikkei 225 Stock Average rose 2 percent to 9,693.73 at the 3 p.m. close of trading in Tokyo, the steepest gain since March 30. The broader Topix index added 1.8 percent to 838.48, paring a decline of 1.6 percent for the month.

“Even though the euro has weakened in the midst of Greece’s debt crisis, the currency is having a little comeback and that’s given some relief to exporter shares,” Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees the equivalent of $104 billion.

The Topix has lost about 10 percent since the magnitude-9 earthquake and tsunami that devastated Japan’s northeast coast on March 11, crippling a nuclear power plant run by Tokyo Electric Power Co. and damaging factories that supply parts to the country’s car and electronics makers.

Production Comeback

Stocks rose today after Japanese manufacturers surveyed by the Trade Ministry said they plan to increase factory output 8 percent this month and a further 7.7 percent in June. If those plans materialize, the index that tracks Japan’s industrial production would rise to 97.1, just below February’s level of 97.9 before the quake.

“Today’s figures are significant because they confirm that production is coming back,” said Daiwa’s Nagano.

The rally in Japanese shares, the first in three days, continued even after Moody’s Investors Service put Japan’s debt rating on review for a downgrade. Faltering growth prospects and “a weak policy response” may hinder government efforts to cut the nation’s debt burden, Moody’s said.

Hacker Attack

Mazda, which gets about a fifth of its sales in Europe, climbed 1.5 percent to 205 yen. Sony, Japan’s largest consumer electronics exporter, advanced 1.9 percent to 2,163 yen. Separately, the maker of televisions and video game consoles said it plans to fully resume its PlayStation Network in all regions excluding Japan, Hong Kong and South Korea by this weekend following a hacker attack six weeks ago.

European Union leaders will decide on additional aid for Greece by the end of June and have ruled out a “total restructuring” of the nation’s debt, said Jean-Claude Juncker, head of the euro-area finance ministers’ group.

The Wall Street Journal, citing unidentified people, reported yesterday that Germany may stop demanding an early rescheduling of bonds for Greece so that the debt-strapped nation can get a new package of loans.

The euro advanced 1.4 percent against the yen at the close of stock market trading in Japan, while the U.S. dollar rose 0.8 percent, easing pressure on the nation’s exporters.

Fanuc rose 1.8 percent to 12,490 yen. Fuji Electric Co., a maker of factory automation equipment and power supplies, surged 5.1 percent to 249 yen. Mitsubishi Heavy Industries Ltd., which makes ships and turbines, climbed 4.8 percent to 394 yen.

Sojitz Corp., a trading company, gained 4.9 percent to 151 yen today. It will boost production of rare metals in Portugal and Canada by as much as 60 percent between 2012 and 2013, the Nikkei newspaper reported today without citing anyone.

Tokyo Electric, which posted the biggest loss on record for a non-financial Japanese company after March’s disaster, declined 2.8 percent to 317 yen. The company’s credit ratings were lowered to junk status by Standard & Poor’s Ratings Services, which cited an increasing likelihood that banks may restructure some of the utility’s debts.

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

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