Japan Stocks Cap Sixth Weekly Gain on U.S. Economic Data

March 16 (Bloomberg) -- Japanese stocks advanced for a fourth day, capping their sixth weekly rise, after positive U.S. data on manufacturing and employment boosted confidence in the global recovery. Gains were limited on speculation the market was overbought.

Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, rose 0.6 percent. Nippon Yusen K.K. (9101) paced gains among shipping lines after container freight rates on Pacific routes jumped this week. Bridgestone Corp., the world’s biggest tiremaker, fell 1 percent after a report the global rubber shortage will deepen this year.

The broader Topix Index climbed 0.4 percent to 866.73 at the 3 p.m. close in Tokyo. The Nikkei 225 Stock Average (NKY) rose 0.1 percent to 10,129.83. The benchmark gauge added 2 percent this week, finishing its sixth weekly gain, the longest streak since December 2010.

“The market remains in a mid-term uptrend with expectations mounting about earnings in the next fiscal year,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “The Nikkei is likely to stay above 10,000.”

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The gauge gained 0.6 percent in New York yesterday, rising above 1,400 for the first time in almost four years, on reports manufacturing in the New York region expanded in March at the fastest pace since June 2010. Claims for jobless benefits fell last week, matching the lowest level in four years.

Sony, Canon

Sony rose 0.6 percent to 1,832 yen after rising about 7 percent over the past two days. Canon Inc. (7751), a camera maker that gets more than 80 percent of its sales abroad, added 0.6 percent to 3,970 yen.

Gains in stocks were limited as the 14-day relative strength index for the Nikkei 225 rose to 79, above the 70 level that some traders see as a sign the market is overbought. The yen rose 0.2 percent to 83.57 against the dollar yesterday. A stronger yen decreases the value of Japanese companies’ overseas income when repatriated.

“Investors want to take a break from the market’s rally toward the weekend,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $27.6 billion. “The U.S. is recovering for sure. The question is if employment optimism will hold. We need a bit more evidence to believe the economy would be fine without further monetary easing.”

Yen, BOJ

The yen has reached an 11-month low against the dollar this week on signs of U.S. recovery and signals the Bank of Japan stands ready to further ease policy. Most BOJ board members found the bank’s Feb. 14 decision to boost its government bond purchases by 10 trillion yen ($120 billion) to be an appropriate move, according to minutes released today.

The Nikkei 225 has risen about 20 percent this year, the second-best performer after German stocks among 24 developed markets this year, according to data compiled by Bloomberg. Shares in the Japanese benchmark are valued at 24.2 times estimated earnings on average, the highest since April 2010. That compared with 13.4 times for the S&P 500 and 11.2 times for the Stoxx Europe 600 Index.

The Nikkei 225 Volatility Index (VNKY) fell 7.9 percent to 20.95, indicating traders expect a swing of about 6 percent on the benchmark gauge over the next 30 days. Trading volume on the index was 7 percent below its 20-day average, according to data compiled by Bloomberg.

The following were among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Rubber companies: The sector fell the most among the Topix’s 33 industry groups. The global shortage of natural rubber will deepen this year as the economy improves in China and India, the biggest buyers, and car sales expand, according to the Association of Natural Rubber Producing Countries.

Bridgestone Corp. (5108) (5108 JT), the world’s biggest tire maker, fell 1 percent to 2,050 yen. Yokohama Rubber Co. (5101 JT) fell 1.2 percent to 583 yen.

Shipping stocks: The group rose the most on the Topix after the Drewry Hong Kong-Los Angeles container rate benchmark jumped to $2,013 per 40-foot container from $1,771 a week earlier. The stocks also gained after the Baltic Dry Index (BDIY), a measure of shipping costs for commodities, gained over the past 16 days.

Nippon Yusen KK (9101 JT), Japan’s biggest shipping line by sales, added 6 percent to 267 yen. Mitsui O.S.K. Lines Ltd. (9104) (9104 JT) gained 2.7 percent to 383 yen, and Kawasaki Kisen Kaisha Ltd. (9107) (9107 JT) advanced 3.4 percent to 181 yen.

Hitachi Ltd. (6501) (6501 JT), a maker of electronic equipment and machinery, rose 2.5 percent to 501 yen. It boosted its net- income forecast by about 20 percent to 490 billion yen for the year ending March 31, the company said in a statement, citing higher-than-expected profit from selling its hard-disk drive business.

Mitsui High-Tec Inc. (6966) (6966 JT), a maker of precision machine tools, jumped 14 percent to 478 yen. The company forecast net income of 400 million yen for the year ending Jan. 31, citing efforts to restructure its business and enhance productivity.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@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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