Japanese Stocks Advance After Italy Premier Announces Austerity Program

Japanese stocks extended the biggest weekly gain in two years after Italy’s premier announced a 30 billion-euro ($40 billion) plan to cut debt, boosting optimism Europe’s crisis would be contained.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s top lender by market value, gained 2.1 percent. Nikon Corp., a camera maker that gets about a quarter of its sales in Europe, climbed 2.4 percent. Toyota Motor Corp. (7203), the world’s top automaker by market value, rose 2.7 percent after U.S. unemployment fell to a two- year low. Inpex Corp. (1605), Japan’s top oil explorer by market value, added 1.6 percent after crude prices rose for a second day.

The Nikkei 225 Stock Average (NKY) rose 0.6 percent to 8,695.98 at the 3 p.m. close in Tokyo. The gauge jumped 5.9 percent last week, the biggest advance since December 2009, as central banks cut the cost of emergency funding for European lenders. The broader Topix climbed 0.6 percent to 748.61 today.

“Italy took a positive step and the country’s credibility is recovering,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “That made the investors to think the region will likely move to the right direction.”

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.7 percent today. The S&P 500 index fell less than 0.1 percent on Dec. 2 after the U.S. jobless rate declined to 8.6 percent, the lowest in more than two years, failing to extend the index’s biggest weekly rally since 2009.

Italian Plan

Japanese lenders rose on signs of progress on the European debt crisis. Mitsubishi UFJ rose 2.1 percent to 345 yen and its closest rival, Sumitomo Mitsui Financial Group Inc., advanced 2.2 percent to 2,212 yen.

Italian Prime Minister Mario Monti will present a austerity package to lawmakers today that included more than 12 billion euros in spending cuts to trim the euro region’s second-largest debt. The proposal would delay retirement, resurrect a tax on first homes and crack down on tax evasion. Monti’s Cabinet approved the plan yesterday, a day ahead of schedule.

Italy has taken steps toward austerity measures,” said Ikuo Mitsui, who helps manage $25 million at Vivace Capital Management Co. “The move is likely to boost the market’s tolerance for risk.”

Also today, German Chancellor Angela Merkel meets French President Nicolas Sarkozy to advance a plan for stricter enforcement of the region’s deficit rules that will be presented to European Leaders at a summit on Dec. 8.

Exporters Rise

Exporters to Europe advanced. Nikon increased 2.4 percent to 1,795 yen. Ricoh Co., an office-equipment maker that gets more than 20 percent of its revenue in Europe, added 0.9 percent to 691 yen.

Toyota climbed 2.7 percent to 2,663 yen. Fuji Heavy Industries Ltd., a carmaker that counts the U.S. as its fastest- growing market, increased 2.8 percent to 448 yen.

Energy companies gained after crude oil for January delivery rose 0.8 percent to $100.96 a barrel in New York on Dec. 2, the highest settlement since Nov. 16. Oil climbed as much as 0.8 percent in electronic trading today.

Inpex increased 1.6 percent to 525,000 yen. Japan Petroleum Exploration Co., Japan’s second-largest energy explorer, added 0.8 percent to 3,315 yen.

Among companies that fell, TDK Corp., the world’s biggest maker of magnetic heads for disk drives, sank 3.9 percent to 3,665 yen, the biggest drop on the Nikkei 225. Goldman Sachs Group Inc. said Western Digital Corp.’s faster-than-expected recovery from the Thai floods will reduce the disk-drive makers reliance on TDK., which supplies some parts.

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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