Japanese Stocks Advance Second Day Day as U.S. Housing Data Beat Estimate

Dec. 21 (Bloomberg) -- Japanese stocks rose for a second day after U.S. housing starts rose more than economists expected and hiring increased in the world’s largest economy, brightening the earnings outlook for Asia’s exporters.

Sony Corp. (6758), Toyota Motor Corp. and Honda Motor Co. rose at least 1.4 percent. Mitsui O.S.K. Lines Ltd. (9104) and Nippon Yusen K.K. advanced after agreeing to an alliance with other shipping lines to curb falling cargo rates. Tokyo Electric Power Co. slumped 9.8 on a report the utility at the center of the worst nuclear accident in 25 years may be taken over by the government.

“The good housing data was a surprise given the housing sector is considered the worst in the U.S.,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.6 billion. “The data is prompting stocks (TPX) to be bought. The move seems rather big in the thin market.”

The Nikkei 225 Stock Average (NKY) rose 1.5 percent to 8,459.98 at the 3 p.m. trading close in Tokyo. The broader Topix Index gained 1 percent to 725.68. All of the gauge’s 33 industry groups gained, with shipping companies (TPMART) rising the most. The number of shares trading hands on the Topix was about 28 percent less than the average over the last 100 days.

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.2 percent today. The index advanced 3 percent in New York yesterday after reports showed U.S. payrolls increased in 29 states last month and the number of U.S. housing starts rose to the highest level since April 2010. Concern about Europe’s debt crisis eased after German business confidence unexpectedly grew.

‘Brighter U.S. Outlook’

“The U.S. economic outlook is getting brighter,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The improvement in the German economy is also a positive contrast to the bleak situation in Europe.”

Exporters gained, with makers of electronics and cars contributing the most to the Topix’s advance. Sony, which depends on overseas markets for 70 percent of its sales, rose 3.4 percent to 1,361 yen. Toyota, Japan’s largest carmaker by market value, added 1.4 percent to 2,511 yen. Honda, No. 2, advanced 2.4 percent to 2,325 yen.

Shares pared gains briefly after the Bank of Japan lowered its assessment for the nation’s economy for a second month while refraining from boosting monetary stimulus, citing easy domestic financial conditions.

Makers of building equipment rose after Chinese Premier Wen Jiabao said the government will offer funding for small companies to boost economic growth in the mainland, Japan’s biggest overseas market. The statement was posted on the central government’s website today.

Komatsu Gains

Komatsu Ltd. (6301), a maker of construction machinery that gets 23 percent of its sales in China, rose 2.6 percent to 1,855 yen. Smaller Hitachi Construction Machinery Co. (6305) gained 2.9 percent 1,310 yen.

The Topix has fallen 19 percent this year, the worst performance since 2008, matching the decline on the Stoxx Europe 600 Index.

Shipping companies, the worst performing group this year on the Topix, rose after Nippon Yusen and Mitsui O.S.K. joined an alliance of shipping companies to curb sliding rates amid slowing demand and overcapacity. Nippon Yusen, Japan’s biggest shipping line by sales, jumped 3.7 percent to 199 yen. Mitsui O.S.K., ranked No. 2, added 1.7 percent to 288 yen.

Olympus Corp. (7733) reversed gains of as much as 12 percent after the Securities and Exchange Surveillance Commission confirmed a report it will raid the scandal-hit company today. The maker of optical equipment faces criminal probes after revelations it falsified accounts to hide investment losses for more than a decade. The stock, which has lost more than half its value in the last two months, fell 1.4 percent to 1,050 yen.

Among stocks that fell, Tokyo Electric slumped 9.8 percent to 211 yen. The utility may be effectively nationalized, the Yomiuri newspaper reported, citing an unidentified person familiar with the plan. The utility denied the report.

Tokyo Electric, owner of the Fukushima nuclear power plant wrecked by Japan’s March tsunami, is the worst performing stock on the Topix this year. Shares have plunged 89 percent.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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