Japanese Stocks Gain on U.S. Building Permits

Japanese stocks rose, with the Nikkei 225 Stock Average capping a second week of advance, after U.S. building permits reached a four-year high and German Chancellor Angela Merkel reiterated her commitment to working with the European Central Bank.

Honda (7267) Motor Co., a carmaker that counts North America as its biggest market, climbed 2.4 percent as the yen traded near its lowest in a month versus the dollar. Makita Corp. (6586), a power- tool maker that gets more than 40 percent of its sales in Europe, gained 3.1 percent. Tokyo Steel Manufacturing Co. jumped 5 percent after increasing steel scrap prices. Yamaha Motor Co., Japan’s second-largest maker of motorcycles, jumped 6.7 percent after its equity rating was lifted by Credit Suisse Group.

“Investor sentiment is moving to risk-on from risk-off globally,” said Ichiro Takamatsu, a fund manager at Tokyo-based Bayview Asset Management Co., which manages about $1.9 billion. “The U.S. economy is back on a recovery track. Positive remarks from the German Chancellor are a benefit for the markets.”

The Nikkei Stock Average 225 (NKY) rose 0.8 percent to 9,162.50 at the 3 p.m. close in Tokyo, with a weekly gain of 3.1 percent. Volume on the gauge was 11 percent above the 30-day average, even with many investors taking the week off for O-bon holidays. The broader Topix (TPX) gained 0.9 percent to 765.81.

The Topix has fallen 12 percent from this year’s peak on March 27 on concern earnings would be hurt by Europe’s debt crisis and slower growth in China and the U.S.

The decline has cut the price of shares on the gauge to 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.4 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

U.S. Futures

Futures on the S&P 500 (SPXL1) were little changed today. The gauge rose 0.7 percent yesterday after building permits rose to an 812,000 annual pace, the most since August 2008. Permits were projected to increase to 769,000, according to the median estimate of 52 economists surveyed by Bloomberg.

Honda, a carmaker that gets almost 45 percent of its sales from North America, gained 2.4 percent to 2,642 yen. Uniden Corp., an electronic equipment maker that counts North America as its biggest market, added 2.2 percent to 184 yen.

“The U.S. economic deterioration is being curtailed,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Euro-region officials are going along with the ECB, reducing uncertainty. There’s less anxiety out there so we should see investors continuing to buy.”

Spain Bailout

Shares extended gains after a person familiar with the matter said Spain is about to get an emergency disbursement from a 100 billion-euro ($123 billion) bailout package. German Chancellor Merkel said the ECB’s insistence on conditionality in return for help to lower borrowing costs in indebted countries matches her country’s priorities to end the crisis in the euro region.

The euro strengthened against the yen to as much as 98.18 yen today in Tokyo, compared with 97.42 at the close of stock trading yesterday, boosting the value of European income at Japanese companies when converted into their home currency.

Makita climbed 3.1 percent to 3,010 yen. Ricoh Co., an office-equipment and camera maker that obtains more than a fifth of its revenue in Europe, rose 2.3 percent to 658 yen.

Tokyo Steel Manufacturing, an electric furnace steelmaker, jumped 5 percent to 296 yen after releasing revised price lists on its website. It raised steel scrap prices for the first time since April 4, increasing the prices by between 5 percent and 8 percent as of today, reflecting steel scrap markets especially in Asia, said company spokesman Nobuaki Nara. Steelmakers gained the most in the Topix’s 33 industry groups.

Yamaha Motor (7272) soared 6.7 percent to 760 yen after Credit Suisse boosted the motorcycle maker’s equity rating to “outperform” from “neutral.” Shipments will likely rebound in Indonesia from this fiscal year through next fiscal year.

Japan Tobacco Inc. declined the most in the Nikkei 225, falling 3.7 percent to 2,480 yen after officials and health researchers said the U.K. and New Zealand are among countries more likely to ban logos from cigarette packages after Australia approved the world’s first uniform-packaging law.

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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