Japan Stocks Swing Between Gain, Loss on U.S., Europe

Japanese stocks gained, snapping a three-day losing streak, after U.S. home prices fell at the slowest pace in more than a year and builders rose ahead of a planned tax increase.

Contractors and developers gained the most in the Topix (TPX) Index after Japan’s lower house yesterday approved legislation to double the sales tax by 2015. Japan Tobacco Inc. (2914) rose 3.7 percent on speculation the higher sales tax may give the cigarette maker an opportunity to raise prices. Satori Electric Co., an electronic equipment trader that gets a third of its sales from China, climbed 1.7 percent amid speculation mainland policy makers may boost stimulus.

“There’s a last-minute jump in demand for houses ahead of the consumption tax increase, so property and construction shares may benefit,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($415 billion) in assets. “Still, the tax increase isn’t good for the economy in the long run.”

The Nikkei 225 Stock Average (NKY) rose 0.8 percent to 8,730.49 at the 3 p.m. close in Tokyo, with volume about 15 percent below the 30-day average. The broader Topix gained 0.9 percent to 745.48. More than three shares rose for each that fell.

The Topix has dropped about 15 percent since its peak on March 27 amid concern growth in the U.S. and China will be slower than estimated and as Europe’s sovereign-debt crisis spread to Spain and Italy.

Below Book

Shares on the Japanese benchmark trade at an average of 0.9 times book value, compared with 2.1 times on the Standard & Poor’s 500 Index and 1.3 times for the Stoxx Europe 600 Index Stoxx 600, according to data compiled by Bloomberg. A number less than one means that companies can be bought for less than value of their assets.

Futures on the S&P 500 Index added 0.1 percent today. The gauge added 0.5 percent in New York yesterday as the S&P/Case- Shiller index of property values in 20 cities dropped 1.9 percent in April from the same month in 2011, the smallest decline since November 2010. The median forecast of 28 economists in a Bloomberg News survey projected a 2.5 percent drop.

“The U.S. housing data certainly shows good movement,” said Masaru Hamasaki, Tokyo-based chief strategist at Toyota Asset Management Co., which manages the equivalent of $23 billion. “The U.S. housing market is starting to bottom out.”

Builders Advance

Contractors and developers gained the most among the 33 Topix industry groups after the parliament’s lower house yesterday approved a bill to raise the double the sales tax to 10 percent in 2015.

Kajima Corp. (1812) soared 6.7 percent to 224 yen and rival builder Taisei Corp. jumped 6.5 percent to 213 yen. Mitsui Fudosan Co., Japan’s largest developer by revenue, gained 3.1 percent to 1,457 yen.

Japan Tobacco, Asia’s largest cigarette maker by market value, gained 3.7 percent to 2,305 yen after Citigroup Inc. analyst Nobuyoshi Miura said in a note the company is expected to raise product prices up to 5 percent, if the sales tax is increased.

Exporters to China advanced on speculation the country may add economic stimulus. China may introduce “more proactive” policies to ensure stable growth, the China Securities Journal said. Separately, the Shanghai Securities News reported China may cut the reserve ratio for banks in July.

Satori Electric rose 1.7 percent to 413 yen. Kuroda Electric Co. (7517), an electronic components maker that gets more than a fifth of its sales from China, advanced 3.3 percent to 881 yen.

-- With assistance from Masaaki Iwamoto in Tokyo. Editors: Nick Gentle, Drew Gibson.

To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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