Nikkei 225 Gains Most in Two Weeks as France, Germany Pledge Europe Rescue
Japanese stocks gained for a third day, with the Nikkei 225 Stock Average rising the most in two weeks, after German and French leaders pledged to support European banks and stem the region’s debt crisis.
Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- largest publicly traded lender, climbed 2.7 percent as stocks resumed trading in Tokyo after a three-day weekend. Mazda Motor Corp., an exporter to Europe whose stock has lost 28 percent over the past three months, jumped 6.1 percent. Inpex Corp. (1605), Japan’s leading oil explorer by market value, gained 3.6 percent after crude prices advanced.
The Nikkei 225 rose 2 percent to 8,773.68 at the 3 p.m. close, the biggest gain since Sept. 27. The broader Topix advanced 1.8 percent to 755, with about four shares rising for each that fell. Japan’s stock markets were closed yesterday for a national holiday.
“Europe is starting to take some concrete steps toward recapitalizing its banks,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $84 billion. “That’s driving a rebound in the market.”
The Topix has tumbled 16 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system. The decline has cut the price of shares on the index to 0.89 times estimated book value, near the lowest since March 2009.
Stocks advanced in Japan today following a rally in U.S. and European stocks that drove the Standard & Poor’s 500 Index up 3.4 percent yesterday, the biggest gain since August. The Stoxx Europe 600 Index also climbed, capping its biggest four- day rally since November 2008.
Shares rose after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3.
Sumitomo Mitsui Financial rose 2.7 percent to 2,137 yen today. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded lender, gained 2.4 percent to 336 yen.
“There is hope that if a comprehensive European bank package is announced, the damage on the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”
Mazda jumped 6.1 percent to 156 yen. Office-equipment maker Ricoh Co., which gets more than 20 percent of its revenue in Europe, climbed 6 percent to 676 yen. Ricoh also got a boost after Credit Suisse Group AG initiated coverage of the company, rating it “outperform.”
Japanese shares also advanced after a U.S. jobs report last week suggested the world’s biggest economy may not be headed for recession, Mitsubishi UFJ Asset’s Ishigane said. U.S. employers added 103,000 jobs in September, compared with a median forecast of 60,000 in Bloomberg survey of economists.
“It looks like the U.S. economy isn’t going to fall back into recession so soon,” Mitsubishi UFJ Asset’s Ishigane said. “The jobs market isn’t as bad as it looked.”
Energy companies gained after oil prices advanced to the highest since Sept. 21. Inpex gained 3.6 percent to 487,500 yen and Japan Petroleum Exploration Co., the nation’s second-largest oil explorer by market value, increased 3.9 percent to 2,929 yen.
Fanuc Corp., a maker of industrial robots, contributed the most to gains on the Nikkei 225 (NKY), jumping 4.3 percent to 11,450 yen. The Tokyo Stock Exchange Inc. said on Oct. 7 that the company will be added to the Topix Core 30 index after Oct. 31. Fanuc will replace Tokyo Electric Power Co., the utility at the center of worst nuclear crisis since Chernobyl.
Among companies that fell, Nikon Corp., a camera maker, declined the most on the Nikkei 225, falling 4 percent to 1,844 yen after the company said production had been suspended at its Thailand unit since Oct. 6 due to flooding.
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