Nikkei 225 Rises Most Since March on ECB Plan, U.S. Data

Japan stocks rose a second day, with the Nikkei 225 (NKY) Stock Average posting its biggest gain since March, as a European bond-buying plan, U.S. employment data and more stimulus in China boosted the outlook for exporters.

Makita Corp. (6586), a power-tool maker that gets more than 40 percent of sales in Europe, advanced 4.1 percent as the yen retreated to its lowest versus the euro since July. Honda Motor Co., an automaker that counts North America as its biggest market, gained 5.2 percent. Hitachi Construction Machinery Co., which relies on China for 17 percent of revenue, climbed 4.7 percent after the nation’s government approved a major road construction plan.

The Nikkei 225 advanced 2.2 percent to 8,871.65 at the close of trading in Tokyo, the most since March 27. Volume was 38 percent above its 30-day average. The equity benchmark posted a 0.4 percent gain this week. The broader Topix Index climbed 2.3 percent to 735.17, with more than three shares rising for each that fell.

“We can see this rally extend for a little bit,” Guy Stear, the head of Asia Pacific research at Societe Generale SA in Hong Kong, said in a Bloomberg TV interview. “The fact that the ECB wants to absorb more risk and the fact that they managed to get it done despite the Bundesbank opposition -- all that in the short term is positive. In the short term Asian stocks are going to do better.”

The Topix dropped 16 percent from this year’s peak on March 27 through today on concern Europe’s debt crisis is deepening and growth is slowing in China and the U.S. The gauge trades at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index. A number less than one means companies can be bought for less than the value of their assets.

Nikkei Volatility

The Nikkei Stock Average Volatility Index (VNKY) tumbled 8.2 percent to 19.18 today, the most since July 27, as equities advanced. The index indicates that traders are expecting a 5.5 percent swing on the equity benchmark in the next 30 days.

ECB President Mario Draghi yesterday said policy makers agreed to an unlimited bond-purchase program to rein in interest rates in the euro area. The program will target sovereign bonds with maturities of one to three years in the most ambitious plan yet to save the euro.

Companies that do business in Europe advanced. Makita rose 4.1 percent to 2,786 yen. Sysmex Corp., a medical-equipment manufacturer that gets 30 percent of sales in the region, gained 4.2 percent to 3,580 yen.

U.S. Stocks

Iron and steel, energy and metals companies recorded some of the biggest advances among the Topix’s 33 industries today amid speculation economic conditions will improve in Japan’s largest markets. Just two groups declined.

Futures on the S&P 500 gained 0.2 percent today. The underlying index increased 2 percent, rising to its highest level in four years, in New York yesterday. Claims for U.S. jobless benefits fell to the lowest in a month, and a private report showed American companies added more workers than forecast. U.S. services expanded at a faster pace.

Honda Motor advanced 5.2 percent to 2,600 yen. Komatsu Ltd., a construction-machinery maker that relies on the Americas for about 25 percent of its sales, gained 6.6 percent to 1,592 yen.

China’s top planning agency approved plans to build 2,018 kilometers (1,254 miles) of roads, its second major construction project announced this week, as the government boosts spending on infrastructure to help spur economic growth.

Hitachi Construction rose 4.7 percent to 1,319 yen. Taiyo Yuden Co., an electronics maker gets 30 percent of revenue in China, gained 7.1 percent to 705 yen.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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