Japan Stocks Rise on Machinery Orders, ECB Banking Plan

June 13 (Bloomberg) -- Japanese stocks rose, reversing yesterday’s losses, after the European Central Bank endorsed a plan to guarantee deposits and Japan’s machinery orders beat analysts’ estimates.

Nikon Corp. (7731), a camera maker that gets 23 percent of its sales in Europe, added 2.3 percent. Fanuc Corp. (6954), Japan’s biggest maker of factory robotics, rose 0.4 percent. Mitsui High-Tec Inc. jumped 16 percent after its operating profit surged more than 700 percent from a year earlier.

The Nikkei 225 Stock Average (NKY) rose 0.6 percent to 8,587.84 at the 3 p.m. trading close in Tokyo. Trading volume was 23 percent below the 30-day average ahead of a Greek election on June 17 that may signal whether the nation exits the euro. The broader Topix (TPX) Index rose 0.3 percent to 726.44 after swinging between gains and losses at least a dozen times.

“Short-term players seem to be betting that Greece won’t fall into a chaotic worst-case scenario after the election,” said Tatsushi Maeno, head of investment at PineBridge Investments Japan Co. in Tokyo. “Long-term investors are sitting on the fence through the Greek election.”

The Topix fell 17 percent from this year’s high on March 27 as China’s economic growth slowed and European policy makers failed to stem concern about the debt crisis. Spain is seeking a banking rescue of as much as 100 billion euros ($125 billion), following Greece, Ireland and Portugal in taking bailouts.

Shares rose after the ECB backed proposals for a banking union that would strengthen euro-area supervision of lenders, establish a deposit guarantee program, and limit “risks for taxpayers” through contributions from the financial industry, according to a report published in Frankfurt yesterday.

“The market has been sandwiched between worries about the Greek election and hopes for policy response,” said Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset Management Co., which oversees about $6.3 billion.

Euro Risk

Gains in stocks were limited after Fitch Ratings said it sees significant risk of capital outflows from the euro area. If Greece exits the monetary union, all 17 members states would likely face downgrades, Fitch’s head of Asia Pacific sovereign ratings Andrew Colquhoun said in Singapore.

Exporters to Europe rose, with Nikon gaining 2.3 percent to 2,292 yen. Konica Minolta Holdings Inc. (4902), a maker of photo films that gets 28 percent of its sales in Europe, advanced 0.5 percent to 592 yen.

Japan’s machinery orders rose 5.7 percent in April, exceeding estimates of a 1.6 percent gain. Fanuc added 0.4 percent to 13,580 yen. Hitachi Construction Machinery Co. gained 0.2 percent 1,478 yen.

The Nikkei 225 Volatility Index (VNKY) slid 3.5 percent to 26.67, indicating traders expect a swing of about 8 percent on the benchmark gauge over the next 30 days. Shares on the measure are valued at 1.09 times book value.

U.S. Futures

Futures on the Standard & Poor’s 500 Index (SPXL1) lost 0.4 percent today ahead of a report forecast to show U.S. retail sales fell in May for the first time in a year. The gauge added 1.2 percent yesterday in New York as Federal Reserve Bank of Chicago President Charles Evans said he would support measures to generate faster job growth.

The policy-setting Federal Open Market Committee meets June 19-20. The Bank of Japan is scheduled to end a two-day policy meeting on June 15.

Among other stocks that rose, Mitsui High-Tec jumped 16 percent to 420 yen after reporting an operating profit of 510 million yen for the quarter ended April 30, up from 61 million a year earlier.

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