Japan Stocks Erase Gain as China PMI Damps Trade Surplus

Japanese shares rose, with the Nikkei 225 (NKY) Stock Average gaining the most in a week, after the government reported higher-than-estimated exports and an unexpected trade surplus for February. Rising crude prices boosted energy companies.

Honda Motor Co. (7267), a carmaker that gets about 80 percent of its revenue overseas, climbed 1.7 percent. Inpex Corp., Japan’s biggest energy explorer by market value, rose 1.4 percent. Fanuc Corp., which makes industrial robotics, lost 1.2 percent after a report that China manufacturing hit a four-month low. Nomura Holdings Inc. slid 1.3 percent after the brokerage was linked to an insider-trading case by a person familiar with the matter.

The Nikkei 225 rose 0.4 percent to 10,127.08 at the 3 p.m. close in Tokyo, its biggest advance since March 15. The broader Topix Index gained 0.4 percent to 862.07, with almost twice as many shares advancing as falling. Volume on the gauge was 19 percent lower than the 30-day average.

“The trade surplus was a surprise,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “The biggest concern was if exports would really recover.”

The Nikkei 225 has risen 24 percent since its low in November on signs of U.S. economic recovery, progress on tackling Europe’s debt crisis and additional monetary easing by the Bank of Japan. The bull market has helped the benchmark equity index nearly recoup all of its losses since last year’s earthquake, tsunami and nuclear crises.

Surprise Surplus

Japanese shipments beat estimates in February, leading to a surprise trade surplus of 32.9 billion yen ($395 million), the Finance Ministry reported today. The yen’s decline against the dollar since the Bank of Japan expanded monetary stimulus last month has made the nation’s exporters more competitive.

Honda climbed 1.7 percent to 3,275 yen. Nikon Corp., a camera maker that gets more than 85 percent of its revenue overseas, rose 1.1 percent to 2,440 yen. Nintendo Co., the world’s biggest maker of gaming consoles, jumped 3.4 percent to 13,020 yen in Osaka.

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge slid 0.2 percent in New York yesterday on concern the best first quarter since 1998 has outpaced economic prospects.

Energy Stocks Climb

Oil-related stocks gained after the U.S. Energy Department said crude inventories unexpectedly dropped 1.16 million barrels last week. Oil for May delivery increased $1.20 to settle at $107.27 a barrel in New York yesterday.

Inpex gained 1.4 percent to 571,000 yen. Offshore energy contractor Japan Drilling Co. added 0.6 percent to 2,713 yen. JX Holdings Inc., a refiner, increased 1.2 percent to 529 yen.

Japanese stocks erased gains earlier in the day after HSBC Holdings Plc and Markit Economics published initial results from a Chinese purchasing manager survey showing that manufacturing activity fell to its lowest since November.

Fanuc (6954), which counts China among its biggest markets, dropped 1.2 percent to 15,170 yen. V Technology Co. (7717), a maker of semiconductor inspection systems that gets 23 percent of its sales from China, dropped 1 percent to 293,100 yen.

Among stocks that declined, Nomura lost 1.3 percent to 391 yen, the most active stock by value in Japan. The brokerage was involved in an insider-trading case connected to energy explorer Inpex’s 2010 stock offering, according to a person with knowledge of the matter. Sumitomo Mitsui Trust Holdings Inc., which has a unit that was also involved, rose 2.2 percent after falling 5.1 percent yesterday.

“Nomura expresses its regret, and will continue to cooperate fully in the investigation,” the Tokyo-based securities firm said in a statement on its website, without explicitly confirming its role in the case.

-- With assistance from Toshiro Hasegawa in Tokyo. Editors: Jim Powell, Nick Gentle

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

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

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