Japanese Stocks Gain as Trading Companies Climb in Tokyo

Japanese stocks rose, with the Nikkei 225 Stock Average recording its highest close since last year’s earthquake, as trading companies gained on higher crude prices. Utilities fell after Citigroup Inc. reduced its recommendation on the companies.

Mitsui & Co. (8031), a trading house that counts commodities as its major source of profit, increased 0.9 percent. Fanuc Corp., an industrial robot maker, rose 2 percent after Citigroup boosted its share-price estimate on the outlook for higher demand. It was the biggest contributor to the Nikkei’s advance. Kansai Electric Power Co. slumped 4.2 percent after Citigroup cut its rating on the stock and broadcaster NHK reported Osaka City may urge the utility to abolish nuclear reactors.

“What we’re seeing is a return to more buoyant growth taking away the impact of negative growth from the nuclear crisis around this time last year,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Very significant tailwinds are helping share prices move higher in the Japanese market.”

The Nikkei 225 Stock Average (NKY) rose 0.1 percent to 10,141.99 as of the 3 p.m. Tokyo-market close. The Nikkei is about 1 percent away from its closing price on March 11 last year, when the magnitude-9 earthquake struck at 2:46 p.m., sparking a sell- off minutes before the end of trading.

The broader Topix Index climbed 0.2 percent to 868.35, with about twice as many stocks gaining as falling. The TSE Second Section Price Index (TSE2), a measure of smaller companies on the Tokyo Stock Exchange, rose for an eighth day, headed for its highest close since September 2008.

Yen Rises

Gains were limited today before a public holiday tomorrow, and after the yen strengthened to 83.31 per dollar today, compared with 83.94 reached on March 16. A stronger yen decreases the value of Japanese exporters’ profits overseas when repatriated.

Marubeni Corp. (8002) advanced 2.7 percent to 643 yen after the Nikkei newspaper reported the trading house and a Japanese fund will pay $850 million to acquire a wind-farm company, without citing anyone.

Mitsui & Co. increased 0.9 percent to 1,431 yen, while Mitsubishi Corp., Japan’s biggest trading company by market value, rose 0.9 percent to 2,027 yen. A measure of trading companies was the second-biggest contributor to the Topix’s advance among 33 industry groups.

Inpex Corp. (1605), Japan’s No. 1 energy explorer, gained 0.4 percent to 577,000 yen, while Komatsu Ltd., a maker of construction and mining equipment, advanced 2.9 percent to 2,508 yen.

Oil Jumps

Oil traded near the highest price in a week in New York as investors bet that the second-highest Saudi Arabian crude output since at least 1980 signals fuel demand is increasing.

Crude for April delivery rose as much as 42 cents, or 0.4 percent, to $107.48 a barrel in electronic trading on the New York Mercantile Exchange. It was at $107.37 at 1:30 p.m. Singapore time. The contract, which expires tomorrow, climbed 1.9 percent to $107.06 a barrel on March 16, the highest close since March 9.

Futures on the Standard & Poor’s 500 Index (SPXL1) gained 0.2 percent today. The Dow Jones Industrial Average snapped a seven- day gain on March 16 after an increase in oil and consumer prices sparked inflation concerns as the U.S. economy improves.

Yearly Gain

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 13.5 times for the S&P 500 and 11.4 times for the Stoxx Europe 600 Index.

Fanuc rose 2 percent to 15,500 yen after Citigroup boosted its share-price estimate to 17,500 yen from 14,500 yen while maintaining its buy recommendation on the stock. Citi cited the robot maker’s prospects for higher production volume from Apple Inc.’s higher capital expenditure. The company supplies Taiwan’s Hon Hai Precision Industry Co., which provides services to Apple.

Power producers fell after Citigroup shifted its stance on the industry to slightly bearish from slightly bullish. The brokerage also cut its rating on individual utility companies including Kansai Electric, Tohoku Electric Power Co. and Hokkaido Electric Power Co.

Kansai Electric dropped 4.2 percent to 1,330 yen, dragging a measure of utilities to the biggest drop in the Topix index. Osaka City may ask the utility to abolish nuclear reactors at a June shareholder meeting, broadcaster NHK reported.

Tepco Slides

The company may leave its dividend payout forecast undecided for the next fiscal year as it considers the risk of a large loss in case it fails to restart its nuclear reactors, Citigroup wrote in a report dated today, stripping away its buy recommendation on the stock. The utility’s President, Makoto Yagi, declined to comment on dividend payments for the next fiscal year at a press briefing in Tokyo on March 16.

Tokyo Electric Power Co., owner of the Fukushima nuclear plant crippled by last year’s tsunami, slid 3.6 percent to 217 yen. The utility may seek funds from the Nuclear Damage Liability Facilitation Fund to compensate victims of the disaster, Nikkei reported.

The Nikkei 225 Volatility Index (VNKY) fell 1.6 percent to 20.61, indicating traders expect a swing of about 5.9 percent on the benchmark gauge over the next 30 days. Trading volume on the index was 23 percent below its 30-day average, according to data compiled by Bloomberg.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

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

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