Japanese Equities Swing Between Gains and Losses

Japanese shares climbed after Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate U.S. growth if needed. Gains were limited after ruling party powerbroker Ichiro Ozawa was found not guilty of violating campaign finance laws, raising concern gridlock may make it difficult to pass new consumption taxes.

Honda Motor Co. (7267), a carmaker that gets almost 45 percent of its sales in North America, added 0.9 percent. Fujitsu General Ltd. soared 11 percent after the air-conditioner company beat earnings estimates. Fanuc Corp. (6954) sank 6.1 percent after the factory-robotics manufacturer forecast lower operating profit.

The Topix Index rose 0.1 percent to 810.10 at the 3 p.m. close, with about three shares advancing for every two that declined. The Nikkei 225 Stock Average (NKY) was little changed at 9,561.83 after swinging between gains of 0.7 percent and losses of 0.3 percent. Volume on the gauge was more than a fifth below the 30-day average before a Bank of Japan meeting tomorrow when additional monetary easing is expected to be announced.

“Keeping interest rates low over the long term is good for the market. The Fed made it clear that they’re going to do that,” said Toshio Sumitani, a strategist at Tokai Tokyo Research Center. “The market is solid because earnings are looking good.”

Gains were limited after Ozawa, 69, was cleared of charges that he helped falsify reports from his political fundraising organization about a 400 million-yen ($4.9 million) land purchase, Tokyo District Court spokeswoman Aya Hatakeyama said.

‘More Chaos’

“Foreign investors are looking at the verdict on Ozawa and thinking, ‘this will mean more chaos in government and less progress in the debate on taxes,’” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co.

The acquittal may further endanger Prime Minister Yoshihiko Noda’s bill to double the 5 percent sales tax by 2015 to rein in the world’s largest debt over the objections of opposition lawmakers. Ozawa heads the largest faction within the Democratic Party of Japan and has criticized the tax proposal as burdening the public at a time when the economy is struggling.

“Politics surrounding the bill remain murky, but this would appear to weaken the probability of passage in May-June,” Barclays Capital said in a report dated today.

Futures on the Standard & Poor’s 500 Index (SPX) added 0.1 percent today. The gauge gained 1.4 percent in New York yesterday after Bernanke said the Fed stands ready to add stimulus if necessary even after leaving its policy unchanged and upgrading its view of the U.S. economy for this year.

Honda gained 0.9 percent to 2,896 yen. Kyocera Corp. (6971), an electronics maker that gets almost a fifth of sales in the U.S., climbed 0.7 percent to 7,560 yen.

U.S. Growth Outlook

Policy makers in the U.S. said they expect growth to gradually accelerate, while refraining from new action to lower borrowing costs. Central bankers upgraded their forecasts for economic growth and unemployment while repeating their view that borrowing costs are likely to remain “exceptionally low” at least through late 2014.

In Japan, almost a fifth of the Topix’s 1,665 companies are scheduled to report earnings this week. Net income grew more than a fifth in the first quarter at 176 companies that reported results since April 10, according to data compiled by Bloomberg.

Fujitsu General (6755) soared 11 percent to 666 yen, its biggest gain since March 2011, after posting net income of 5.17 billion yen ($64 million) on rising overseas sales in the year ended March 31. The air-conditioner maker forecast profit will grow 64 percent this fiscal year.

KDDI Corp., Japan’s second-largest mobile-phone operator, advanced 1.5 percent to 532,000 yen after forecasting profit will rise to 250 billion yen this fiscal year. The company also announced a 100-for-1 stock split.

Fanuc Drops

Fanuc declined the most on the Nikkei 225, plunging 6.1 percent to 13,900 yen after saying it expects a 3.1 percent drop in operating profit to 113 billion yen for the six months ending September.

“People may think the stock has peaked out,” Tokai Tokyo Research’s Sumitani said.

Komatsu slid 1.5 percent to 2,339 yen after Caterpillar Inc. (CAT), the world’s largest maker of construction equipment, reported a gain in first-quarter revenue that missed estimates after sales fell in China and Brazil.

-- With assistance from Masaaki Iwamoto in Tokyo. Editors: Jim Powell, Jason Clenfield

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net

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