Japanese Stocks Cap Best Week Since 2009 as U.S. Manufacturing Surprises

Japanese stocks rose for a second day, sending the Nikkei 225 (NKY) Stock Average to its biggest weekly advance in two years, after U.S. manufacturing grew more than economists estimated and Goldman Sachs Group Inc. and UBS AG said shares will rebound next year.

Kajima Corp. and other builders gained after UBS said government measures to help Japan recover from the March earthquake may boost corporate earnings. DeNA Co., the social- network website operator that’s buying a professional baseball team, jumped 8.1 percent after Credit Suisse AG initiated coverage on the stock with an “outperform” rating. Fuji Heavy Industries Ltd. (7270) fell 1.6 percent after the carmaker recalled some Subaru models to repair brake defects.

The Nikkei 225 rose 0.5 percent to 8,643.75 at the 3 p.m. close in Tokyo. For the week, the gauge gained 5.9 percent, the biggest advance since December 2009, as China lowered curbs to lending and central banks fought Europe’s debt crisis by making it cheaper for banks to borrow in dollars. The broader Topix rose 0.6 percent to 744.14 yen today.

“The U.S. economy isn’t as weak as investors feared,” said Kenji Sekiguchi, general manager at Mitsubishi UFJ Asset Management Co. “The focus has shifted temporarily away from Europe and toward the U.S., while investors wait for Europe to come up with policies.”

S&P Futures

Futures on Standard & Poor’s 500 Index (SPXL1) rose 0.4 percent. The index fell 0.2 percent yesterday in New York as better-than- forecast manufacturing growth and a rally in French and Spanish bonds weren’t enough to extend the biggest three-day gain in the gauge since March 2009.

The Japanese government yesterday said it plans a fourth extra budget, a step unprecedented since postwar reconstruction, to help shore up an economic recovery that’s under threat from a surge in the yen, Europe’s crisis and Thai floods that have disrupted production.

The spending package will probably be more than 2 trillion yen ($26 billion), Finance Minister Jun Azumi said yesterday. While governments in Europe and the U.S. are cutting spending, Japan has already allocated 18 trillion yen in three packages since the record earthquake in March.

Builders Obayashi Corp. and Tobishima Corp. advanced at least 2.8 percent. Kajima, Japan’s biggest construction company by sales, climbed 4.4 percent to 240 yen. Deutsche Bank AG today said the stock was one of its top ten Japanese picks.

Below-Average Turnover

The value of shares traded on the Topix was below average ahead of a U.S. Labor Department report that is expected to show payrolls climbed by 120,000 workers in November after rising by 80,000 the previous month. Turnover on the first section of the Tokyo Stock Exchange totaled 915 billion yen, about 30 percent less than this year’s average of 1.3 trillion yen.

Stocks (TPX) rose after Goldman Sachs said the Topix is likely to rise to 800 by the end of 2012 as corporate profits rebound. UBS said the index will likely reach 930 next fiscal year as the government spending boosts earnings.

A gauge tracking communications companies was the biggest contributor to the Topix’s gain among its 33 industry groups. Credit Suisse initiated coverage of Japan’s Internet sector with a rating of “overweight,” saying companies including Gree Inc. and DeNA will start to export content.

DeNA, operator of the Mobage gaming site, jumped 8.1 percent to 2,519 yen. Baseball owners approved DeNA’s takeover of the Yokohama BayStars team, Chairman Makoto Haruta said yesterday. Gree, which runs a Facebook-like service in Japan, advanced 2.3 percent to 2,514 yen.

Shipping lines gained after the Baltic Dry Index, a measure of cargo rates, rose for a fourth day. Mitsui O.S.K. Lines Ltd. increased 3.9 percent to 269 yen. Kawasaki Kisen Kaisha Ltd. gained 0.8 percent to 138 yen. The Topix index that tracks shipping lines has fallen by about half this year.

Among companies that fell, Fuji Heavy Industries dropped 1.6 percent to 436 yen after the carmaker recalled some Subaru models to fix brake defects. Fuji Heavy’s Subaru unit said it’s halting sales of three of its four 2012 models in the U.S.

-- With assistance from Masaaki Iwamoto in Tokyo. Editor: Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

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

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