Japan Stocks Advance as Tepco Rebounds, Toyota Climbs on Quake Recovery

Japanese stocks gained for the first time in four days as Tokyo Electric Power Co. advanced after the government said it didn’t support a breakup of the utility and as carmakers climbed.

Tokyo Electric, operator of the nuclear plant crippled by the March 11 earthquake and tsunami, rebounded from yesterday’s record 28 percent plunge. Toyota Motor Corp. (7203) climbed 2.2 percent after the company said it will be able to announce earnings forecasts this week, boosting confidence that the world’s No. 1 carmaker is recovering from the quake. Camera-maker Canon Inc. (7751) sank 2.6 percent after the end of a share buyback program.

The Nikkei 225 (NKY) Stock Average gained 0.7 percent to 9,442.95 at the 3 p.m. close in Tokyo, fluctuating between gains and losses more than 20 times in the morning session after the yen rose against the dollar last night. The broader Topix rose 0.7 percent to 813.76. Stocks in the index trade at an average of 0.93 times book value, the lowest level among the world’s 15 largest equity markets.

“Shares are undervalued,” said Naoki Fujiwara, who helps oversee $6 billion in Tokyo at Shinkin Asset Management Co. “The currency is stable after temporarily touching a level stronger than 80 yen.”

Japan’s currency traded near its highest in a month today. The yen gained to as high as 79.98 yen to the U.S. dollar yesterday, the highest intraday level since May 5, according to data compiled by Bloomberg. A strong yen reduces the value of overseas sales when repatriated.

Thin Volume

Shares fluctuated today amid thin volume. The total value of stocks traded on the Topix fell to 1.27 trillion yen today, 15 percent less than the 12-month average.

The Topix has tumbled 12 percent since a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, disabling Tokyo Electric’s Fukushima Dai-Ichi plant and leaving almost 24,000 people dead or missing.

Tokyo Electric rallied 4.4 percent to 216 yen after Chief Cabinet Secretary Yukio Edano said the power company’s liquidation should be avoided to protect victims of the disaster entitled to compensation. Edano was responding to comments yesterday by Tokyo Stock Exchange President Atsushi Saito, who said Tokyo Electric should be put into bankruptcy protection.

Chubu Electric Power Co. advanced 2 percent to 1,152 yen. Kansai Electric Power Co. rose 2 percent to 1,226 yen.

Toyota Forecast

Toyota climbed 2.2 percent to 3,285 yen after the carmaker said it will announce full-year earnings forecasts for the year ending in March 2012 on June 10 in Tokyo. The carmaker has delayed the announcement because supply chain disruptions from the quake have made it difficult to predict production levels.

Separately, the Nikkei newspaper reported the carmaker will raise Prius wagon production to 5,000 a month from an earlier planned 3,000 a month by August or September.

“Production is gradually normalizing, and there is an expectation of business circumstances recovering a lot quicker,” said Hiroichi Nishi, equities manager at SMBC Nikko Securities Inc. “Auto companies will announce their full-year forecasts soon, which they couldn’t figure out before either.”

Toyota-related companies also gained. Denso Corp. (6902), a maker of car air-conditioners and airbags, rose 1.6 percent to 2,818 yen. Aisin Seiki Co., which makes transmissions and clutches, increased 2 percent to 2,888 yen.

Nissan Motor Co. and Mitsubishi Motors Corp. (7211) both advanced at least 2 percent.

The Standard & Poor’s 500 Index yesterday retreated 1.1 percent to the lowest level since March 18 in New York, falling for a fourth day in New York amid concern economic growth is slowing and the Federal Reserve will boost capital requirements for the nation’s largest banks.

Canon sank 2.6 percent to 3,745 yen, the biggest drop on the Nikkei 225, after announcing it completed a 50 billion yen ($623 million) stock buyback.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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

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