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Nikkei 225 Rebounds, Gains Most Since March, on Signs of Europe Action

Japan’s Nikkei 225 Stock Average gained the most since March, rebounding from a 2 ½-year low, on speculation European leaders will act to prevent the region’s sovereign-debt crisis from getting worse.

Sumitomo Mitsui Financial Group Inc. (8316) advanced 3.4 percent after European and U.S. lenders surged yesterday following a report that the European Central Bank may resume buying some loan-backed bonds. Canon Inc. (7751), a camera maker that depends on Europe for about a third of its sales, climbed 4.3 percent. Bridgestone Corp. (5108) and other makers of tires surged on speculation auto demand in China will boost sales.

“Market psychology got a little boost on speculation the ECB will take some action,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. in Tokyo. “Still, it’s too early to say the market has hit bottom.”

The Nikkei 225 (NKY) rose 2.8 percent to 8,609.95 at the 3 p.m. close in Tokyo, advancing the most since March 22. The broader Topix gained 2.7 percent to 748.55. The gauge has fallen 17 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest markets.

Futures on the Standard & Poor’s 500 Index climbed 0.6 percent today. The index gained 2.3 percent yesterday after a euro-region central bank official said the ECB may discuss buying some loan-backed securities from banks at a policy meeting on Oct. 6. Bank of America Corp. and JPMorgan Chase & Co. rose at least 4.6 percent.

Lenders Advance

Sumitomo Mitsui Financial Group, Japan’s second-largest publicly traded lender, climbed 3.4 percent to 2,148 yen. Mitsubishi UFJ Financial Group Inc. gained 4.3 percent to 343 yen. Japan’s biggest bank by market capitalization also got a boost after Daiwa Securities Group Inc. raised the lender’s investment rating to “outperform” from “neutral.”

The European Central Bank may also discuss cutting interest rates and offering 12-month loans to banks again at the Oct. 6 policy meeting, according to the official. A spokesman for the Frankfurt-based ECB declined to comment.

Japanese exporters to Europe advanced as the yen weakened against the shared currency. Canon gained 4.3 percent to 3,505 yen. Olympus Corp., an optical-equipment maker that generates more than 20 percent of its sales in Europe, jumped 5.2 percent to 2,390 yen. Shares also rose after Cosmo Securities Co. initiated coverage of the endoscope maker with a rating of “neutral plus” and a price target of 2,800 yen.

Bridgestone, Tepco

The euro gained to as much as 103.57 yen today in Tokyo, compared with 102.18 at the close of stock trading yesterday. A stronger euro boosts the value of some income for Japanese exporters.

Bridgestone and other tiremakers advanced the most among the 33 Topix industry groups on speculation sales will grow amid record demand for cars in China and the biggest increase in Japanese vehicle production in three decades.

Bridgestone, Japan’s biggest tiremaker, added 6.6 percent to 1,727 yen. Smaller Sumitomo Rubber Industries Ltd. gained 6.2 percent to 955 yen as China’s vehicle sales exceeded the combined total of General Motors Co. and Volkswagen AG in the first half. Also, Japanese car output more than doubled in three months as factories reopened after the March earthquake.

Toshiba Corp. and Tokyo Electron Ltd., two Japanese companies among many that go ex-dividend tomorrow, advanced at least 3.6 percent. Today was the last day to buy shares in the companies and still get a first-half dividend.

Among decliners, Tokyo Electric Power Co. dropped 6.2 percent to 243 yen after the Nikkei newspaper reported the cost of compensating victims of the Fukushima nuclear disaster may exceed 3 trillion yen ($39.3 billion).

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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