Japan Stocks Rise on IMF Forecast, Spanish Bonds

April 18 (Bloomberg) -- Japanese shares rose, with the Nikkei 225 (NKY) Stock Average gaining the most in three weeks, after Spain sold more debt than its target and the International Monetary Fund raised its global economic forecast, boosting the earnings outlook for Japanese exporters.

Canon Inc. (7751), a camera maker that gets more than 30 percent of its revenue in Europe, rose 3.2 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, rose 2.9 percent on optimism Europe’s debt won’t derail the global recovery. Sumitomo Electric Industries Ltd. advanced 5.4 percent after the Nikkei newspaper reported it plans to commercialize a system that combines solar power generation with storage batteries.

The Nikkei 225 gained 2.1 percent to 9,667.26 as of the 3 p.m. trading close in Tokyo, rising the most since March 27. The broader Topix Index added 2 percent to 819.27 with all but one of its 33 industry groups advancing. Gains accelerated as Bank of Japan Deputy Governor Kiyohiko Nishimura said it’s ready for additional easing if necessary, fueling speculation that further loosening may be announced at the bank’s April 27 meeting.

“The markets are getting used to Europe’s woes, which are still negative factors but getting stale,” said Masafumi Oshiden, an investment manager at ING Mutual Funds Management Co. (Japan) Ltd., which holds about $18.5 billion. “We are seeing a rally across sectors with big shares leading the way up.”

The benchmark Nikkei 225 has retreated 6 percent since March 27, when it recouped losses since last year’s natural and nuclear catastrophes. The gauge has fallen on renewed concern about Europe’s debt crisis and signs of economic slowdown in China and the U.S.

IMF Raises Estimate

Futures on the Standard & Poor’s 500 Index (SPXL1) added 0.1 percent today. The gauge climbed 1.6 percent in New York yesterday after the IMF raised its 2012 global growth estimate to 3.5 percent from 3.3 percent and Spanish bonds gained following an auction. Expectations that Europe’s debt crisis is stabilizing outweighed data that showed production at U.S. factories dropped in March for the first time in four months and builders broke ground on fewer homes than forecast.

“The environment for equities is pretty good,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. in Sydney, which manages about $1 billion. “Even though 2012 is going to be a tough year because most of Europe will be in recession for a large part of this calendar year, you are still looking at a global growth rate of 3.5 percent, which is a pretty decent.”

Makers of electronics and cars contributed about 34 percent to the Topix’s rally as the yen fell against all of its 16 major counterparts. A weaker Japanese currency boosts the value of overseas earnings for companies that do business abroad.

Canon added 3.2 percent to 3,820 yen. Toyota Motor Corp., Asia’s biggest carmaker, advanced 2.8 percent to 3,330 yen.

Banking Stocks Advance

Financial shares also rose as concern about the European debt crisis receded. Mitsubishi UFJ advanced 2.9 percent to 397 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- biggest bank by market value, rose 2.4 percent to 2,693 yen.

Sumitomo Electric Industries advanced 5.4 percent to 1,099 yen. The company will sell a system that combines solar power with storage batteries, the Nikkei reported. A test facility is being built in Yokohama, and the company is targeting about 100 billion yen ($1.23 billion) in sales in fiscal 2020.

The Nikkei 225 Volatility Index fell 4.9 percent to 19.59, indicating traders expect a swing of about 5.6 percent on the benchmark equity gauge over the next 30 days. Trading volume was 22 percent below the 30-day average.

Shares on the Topix are valued at one times book value, compared with 2.3 times for the S&P 500 and 1.4 times for the Stoxx Europe 600 Index. A number below one means that investors can buy companies for less than the value of their assets.

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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