Topix Rises to Month High on Trade Report, Stimulus Bets

Japanese stocks advanced, with the Topix Index reaching a month high, as the country’s imports and exports exceeded estimates, signaling stronger demand, and as investors speculated central banks globally may do more to boost economic growth.

Sony Corp. (6758), a consumer electronics company that gets more than 65 percent of revenue outside Japan, gained 3.5 percent. Daio Paper Corp. (3880) surged after a Nikkei newspaper report that Hokuetsu Kishu Paper Co. will buy a 20 percent stake. Mitsubishi Heavy Industries Ltd. (7011) fell 3.1 percent after U.S. regulators found excessive wear at a shut nuclear plant in California that the company designed generators for.

The Topix advanced 1.7 percent to 747.34 at 3 p.m. in Tokyo, the highest close since May 15. All 33 industry groups in the index climbed. The Nikkei 225 Stock Average (NKY) rose 1.1 percent to 8,752.31, with volume 11 percent lower than the 30-day average. Japan reported a 10 percent gain in exports for May, beating estimates for a 9.7 percent rise.

“I did not expect that exports were this strong given the current world economic situation,” said Takao Goto, a market analyst at SBI Securities Co., Japan’s biggest online security brokerage firm. “The strong exports were led by the automobile sector, the biggest industry in Japan, so the positive influence on the Japanese economy would be large.”

The Topix has fallen 14 percent from this year’s peak on March 27 as China’s growth slowed and on concern Europe’s debt crisis is spreading. Shares on the index are valued at 0.88 times book value. A number below one means a company can be bought for less than the value of its assets.

Operation Twist

Signs of slowing growth amid Europe’s debt crisis could mean the U.S. Federal Reserve, which began a two-day meeting yesterday, will extend its so-called Operation Twist, according to JPMorgan Chase & Co., Jefferies & Co. The program involves selling short-term debt and buying longer-term bonds.

“Expectations are building that the Fed will take some kind of action,” said Yoshihisa Okamoto, who helps oversee the equivalent of $34 billion at Mizuho Asset Management Co. “I don’t think there will be another round of quantitative easing, but I think they’ll extend Operation Twist. China has shifted toward an easing posture except in the real estate sector.”

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge advanced 1 percent yesterday and closed at its highest in more than a month as analysts at JPMorgan, Jefferies and Goldman Sachs Group Inc. speculated the Federal Reserve will move to spur growth.

Stocks also advanced after euro-area leaders at the Group of 20 summit in Mexico pledged to “take all necessary policy measures” to defend the currency union and boost protection of the region’s struggling banks, according to a statement.

Sony climbed 3.5 percent to 1,103 yen. Toyota Motor Corp. (7203), Asia’s biggest automaker, increased 1.2 percent to 3,050 yen.

China Policy

Adding to speculation for more global stimulus was a report that China’s fiscal policy should be “ proactive” to sustain faster growth, according to the China Daily, which cited a proposal from the Chinese People’s Political Consultative Conference National Committee.

Daio Paper soared 7.2 percent to 445 yen. The papermaker said it’s in talks with Hokuetsu Kishu on investment but “nothing concrete” was decided. The Nikkei earlier that Hokuetsu was eyeing a 20 percent stake in its competitor. Hokuetsu climbed 3.3 percent to 402 yen.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum yesterday climbed 1 percent to the highest close since May 29.

Mitsui & Co. gained 1.8 percent to 1,166 yen. Mitsubishi Corp. (8058), Japan’s top commodities trader by revenue, added 2 percent to 1,564 yen.

Mitsubishi Heavy declined the most in the Nikkei 225 after U.S. federal regulators reported faulty computer analysis and manufacturing changes appear to have caused excessive wear in steam generator tubes at a nuclear plant in California. Mitsubishi Heavy, which built the generators and provided computer simulation software, lost 3.1 percent to 313 yen.

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: Nick Gentle at ngentle2@bloomberg.net

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