Japanese Stocks Advance as GDP Expands 6%, Italy Names New Prime Minister

Japan stocks rose, with the Nikkei 225 (NKY) Stock Average paring two weeks of losses, after the nation’s economy expanded in the third quarter and amid optimism new governments in Europe will help prevent a worsening of the region’s debt crisis.

Sumitomo Mitsui Financial Group, Inc., Japan’s second- largest lender by market value, rose 2.2 percent. Nippon Electric Glass Co. led gains among makers of the material, rising 3.3 percent, after Barron’s said shares of industry- leader Corning Inc. are poised to surge. Olympus Corp. (7733) surged by the daily limit at the close after a report the scandal-hit company may avoid delisting.

The Nikkei 225 advanced 1.1 percent to 8,603.70 at the close in Tokyo, its biggest gain since Nov. 9. The broader Topix index climbed 0.9 percent to 735.85. Stocks gained after a report Japan’s economy grew for the first time in four quarters as exporters rebounded from the March earthquake.

“Japan’s growth figure wasn’t a big surprise, but it certainly is a relief for investors,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. New governments in Italy and Greece helped ease concern the countries will default, he said. “But that doesn’t mean Europe’s debt crisis is over. The market will continue to be sensitive on the issue.”

Year’s Slide

The Topix index sank 19 percent this year through Nov. 11, amid concern Europe’s debt crisis and a slowdown in the U.S. would hamper Japan’s export-led recovery. The decline has cut the price of shares on the index to 0.9 times estimated book value, compared with 1.07 times at the start of the year.

Futures on the Standard & Poor’s 500 Index increased 0.4 percent today. The U.S. equity benchmark gained 2 percent on Nov. 11 in New York after Italy approved debt reduction plans.

Mario Monti, former European Union competition commissioner, will lead a new government in Italy after the region’s debt crisis led to the unraveling of a coalition led by Prime Minister Silvio Berlusconi. President Giorgio Napolitano offered Monti the post after sounding out the country’s political parties on Nov. 13.

Greek Prime Minister Lucas Papademos, who was sworn in on Nov. 11, said the country’s new government must implement decisions from an Oct. 26 European summit to receive more loans and avoid default. European leaders meeting in Brussels at last month’s summit cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted the regional rescue fund’s capacity to 1 trillion euros ($1.4 trillion).

‘Close to Resolution’

“The situation in Greece has dramatically improved with the appointment of a unity government out there, and Italy looks like it’s getting close to a resolution,” said Angus Gluskie, who manages more than $350 million at White Funds Management in Sydney. “Two of the largest concerns of the market are being partially taken off the table.”

In Japan, gross domestic product in the three months ended Sept. 30 grew at the fastest pace in 1-1/2 years as exports recovered from a record earthquake. The economy expanded at an annualized 6.0 percent, the Cabinet Office said today in Tokyo. The median forecast of 26 economists surveyed by Bloomberg News was for a 5.9 percent increase. Japan’s return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp. making up for lost output from the disaster.

Brokerages Rebound

Securities firms’ shares rebounded after tumbling last week when camera maker Olympus disclosed hidden losses, roiling investor confidence in the country’s corporate governance.

Nomura Holdings Inc. shares tumbled to the lowest in at least 37 years on Nov. 8 on speculation it was involved in the Olympus scandal. The brokerage wasn’t involved in the concealment of losses, Hajime Ikeda, managing director of Nomura’s corporate communications, said the same day.

Sumitomo Mitsui gained 2.2 percent to 2,066 yen, while Nomura jumped 5.8 percent to 257 yen. Daiwa Securities Group Inc., Japan’s second-largest brokerage by market value, advanced 2.8 percent to 257 yen.

Trading houses rose after commodity prices increased. Mitsubishi Corp. (8058), Japan’s biggest trading company by market value, rose 2.1 percent to 1,579 yen, while Mitsui & Co., a trading house that counts commodities as its biggest source of profit, gained 1.5 percent to 1,157 yen.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 1.8 percent on Nov. 11, while crude for December delivery climbed 1.2 percent to $98.99 a barrel in New York on Nov. 11.

Nippon Sheet Glass, which counts Europe as its biggest market, jumped 2.9 percent to 144 yen. Nippon Electric Glass Co., a glassmaker based in the western prefecture of Shiga, gained 3.3 percent to 724 yen.

Olympus Surges

Flat-panel makers have “drastically” cut production and inventories, Barron’s said in its Nov. 14 edition. U.S.-based glass panels maker Corning Inc. may rise 20 percent or more if sales of television and computer displays pick up, it said, citing Darice Liu of Brigantine Advisors.

Olympus rallied by its daily limit of 80 yen, or 17 percent, to 540 yen. Japan’s securities regulator may recommend Olympus pay a levy for making false financial statements to keep its shares from being delisted, Reuters reported, citing an unidentified source familiar with the case.

Tosoh Corp. (4042), a petrochemical products maker, plunged 4.4 percent to 219 yen, dropping the most on the Nikkei, after a fire at its plant in western Japan. The company expects “severe damage” to its equipment, said Managing Director Yasuyuki Koie. A missing worker was found dead this morning at the factory, President Kenichi Udagawa said.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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

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