Topix Has Biggest Weekly Gain in a Year as Europe Gropes Toward Agreement

Japanese stocks rose, sending the Topix index to its largest weekly gain in almost a year, after European leaders said Greece is getting closer to meeting conditions for a rescue, easing concern the country will suffer a default that destabilizes the region’s banking system.

Sony Corp. (6758), which sells 20 percent of its PlayStation game consoles and other products in Europe, increased 2.4 percent. Kawasaki Kisen Kaisha Ltd. (9107), Japan’s third-biggest shipping line by sales, advanced 3.8 percent after cargo rates increased. Toshiba Corp. (6502) climbed 4.9 percent after Mitsubishi UFJ Morgan Stanley Securities Co. raised its investment rating on the maker of semiconductors and nuclear-power plants.

“Investors are feeling more willing to take on risk,” said Ayako Sera, a strategist at Sumitomo Trust & Banking Co. in Tokyo, which manages the equivalent of $306 billion. “Greece has cleared the minimum requirement for the next loan, but the final hurdle, parliament’s approval of the austerity programs, still remains.”

The Nikkei 225 Stock Average rose 0.9 percent to 9,678.71 at the 3 p.m. close in Tokyo. The broader Topix index gained 0.9 percent to 833.20. The gauge has lost 10 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years, damaging factories, and leaving more than 23,000 people dead or missing.

Credit Freeze

For the week, both gauges increased 3.5 percent, with the Topix rising the most since the period ended July 9. Shares on the broader gauge rebounded this week from a three-month low on June 17 that came as foreign investors sold shares on concern a Greek default would trigger a freeze in credit markets similar to the one in 2008 when Lehman Brothers Holdings Inc. collapsed.

Overseas investors, who account for more than half of the trades on Japanese exchanges, sold more shares last week than anytime since August, according to the Tokyo Stock Exchange. Investors from outside Japan sold 142.8 billion yen ($1.8 billion) more shares than they bought in trading on the country’s top three bourses.

Japanese Economy Minister Kaoru Yosano said today he “strongly” believes the consumption tax should be doubled to 10 percent by 2015 to help rein in a public debt that is about twice the size of the country’s yearly economic output.

Sales Tax

Seven & I Holdings Co., Japan’s biggest supermarket operator, slipped 0.2 percent to 2,126 yen after Yosano’s comments. Shimachu Co., a furniture store chain, fell 2 percent to 1,969 yen, while clothier Shimamura Co. declined 1.1 percent to 7,390 yen.

Japan’s sales tax was last increased in 1997, after which the country plunged into recession, consumer spending slumped and Prime Minister Ryutaro Hashimoto was forced from office.

Exporters climbed today amid optimism renewed confidence Europe will come to Greece’s rescue in order to avert a default that could destabilize the region. Sony advanced 2.4 percent today to 2,077 yen. TDK Corp. (6762), an electronics manufacturer that gets about 15 percent of its revenue from Europe, gained 1.7 percent to 4,500 yen.

Officials from the European Union and International Monetary Fund yesterday endorsed a package of spending cuts and tax increases proposed by Greek Finance Minister Evangelos Venizelos to win bailout money next month, according to a person familiar with the matter. Greece’s parliament must pass the measures in a vote next week in order to get a loans that will allow it to cover 6.6 billion euros of maturing bonds in August.

Aid For Greece

“The fact that Europe is coming to the aid of Greece is a positive for the market,“ said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “There’s less of chance that the crisis spills over into neighboring countries.”

Shipping companies had the biggest gain among the 33 Topix industry groups after the Baltic Dry Index, a measure of shipping rates for commodities, increased yesterday for the first time in five days, gaining 0.6 percent. Kawasaki Kisen advanced 3.8 percent to 277 yen. Nippon Yusen K.K., the country’s largest shipping line by sales, increased 2 percent to 301 yen.

Toshiba leapt 4.9 percent to 409 yen, the most since March 22 after the company had its rating raised to “outperform” from “neutral” at Mitsubishi UFJ Morgan Stanley Securities. Earnings will rise on sales of atomic power plants and chips used to store songs and movies on devices including Apple Inc.’s iPhone, the securities firm said.

Shares of Toshiba have fallen 18 percent since the March 11 tsunami and earthquake that crippled Tokyo Electric Power Co.’s Fukushima Dai-Ichi Nuclear plant, sparking worldwide debate about the safety of nuclear power. Germany Chancellor Angela Merkel last month decided to shut all of the country’s atomic plants by 2022.

Mitsubishi UFJ Morgan Stanley said that, despite the backlash, demand from China would help Toshiba to stick close to its target of selling 39 reactors by the year ending March 2016. China has 13 reactors and plans to boost the number to more than 100 by 2020, according to the country’s Ministry of Environmental Protection.

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: Nick Gentle at ngentle2@bloomberg.net.

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