Japan Stocks Rebound as Europe Shrugs Off S&P Rating Cuts; Builders Gain

Japanese stocks rose, following a rebound in European markets, as investors shrugged off Standard & Poor’s downgrade of France and eight other European countries.

Nippon Sheet Glass Co., which depends on Europe for about 40 percent of its sales, climbed 2.2 percent after French borrowing costs eased and the Stoxx Europe 600 Index rose for the first time in four days. Fanuc Corp. (6954), a maker of factory robots that counts Asia as its biggest market, gained 3.2 percent after China said its economy grew more than analysts expected. Builders rose the most among the 33 industry groups on the Topix (TPX) Index amid speculation post-disaster reconstruction will boost earnings.

The Nikkei 225 Stock Average rose 1.1 percent to 8,466.40 at the 3 p.m. close in Tokyo. The broader Topix advanced 0.9 percent to 731.53. Both gauges dropped yesterday after S&P’s cut credit ratings for nine European countries.

“European markets didn’t take the downgrades very seriously and that reassured investors,” said Kenji Sekiguchi, general manager at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $75 billion. “Japanese stocks are basically following the European markets.”

The Stoxx Europe 600 Index climbed 0.8 percent yesterday, snapping three days of losses, as French borrowing costs fell at the country’s first debt auction since S&P stripped Europe’s second-biggest economy of its AAA rating. Stock markets in the U.S. were closed yesterday for a holiday. Standard & Poor’s 500 Index climbed 0.6 percent today.

Nippon Sheet Glass (5202) rose 2.2 percent to 137 yen. Makita Corp., a maker of power tools that counts Europe as its biggest market, leapt 3.9 percent to 2,608 yen.

China Growth

China’s gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today, beating the median forecast of economists for 8.7 percent growth. The economy expanded less than 9 percent for the first time since mid-2009, based on previously reported data.

Fanuc gained 3.2 percent to 11,970 yen. Kubota Corp., a maker of farming equipment that gets almost 20 percent of its sales in Asia, advanced 2.8 percent to 668 yen.

“China’s senior leadership is very, very concerned about the outlook in Europe, which tells you the bias is to ease policy more than they have already,” said Andrew Pease, Sydney- based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion.

Obayashi, (1802) Japan Bridge

The Topix (TPX) has risen 0.4 percent this year, compared with a 2.5 percent gain by the S&P 500 and a 2.7 percent increase by the Stoxx Europe 600 Index. Stocks in Japan’s broadest benchmark are valued at 15.1 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.1 times for the Stoxx 600.

Obayashi Road Corp. and other construction companies advanced on expectation the companies will benefit as Japan rebuilds from the March 11 earthquake and tsunami. Obayashi surged 21 percent to 286 yen, extending yesterday’s 14 percent gain. Japan Bridge Corp. soared 16 percent to 728 yen.

“Construction-related shares may extend their gains through May on earnings,” said Hiroki Kawashima, a Tokyo-based analyst at SMBC Nikko Securities Inc. “There may be broad selling after earnings reports are released.”

Japan Steel Works Ltd. (5631), the world’s only builder of the pressure vessels that hold radioactivity inside reactors, gained the most on the Nikkei 225. (NKY) Shares advanced 6.6 percent to 568 yen after Bank of America Merrill Lynch said the government may allow nuclear plants to be restarted as early as April following shutdowns in the wake of the Fukushima disaster.

To contact the reporter. 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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