Japanese Stocks Rise on U.S. Housing Starts, Weaker Yen

Japanese shares rose, with the Nikkei 225 (NKY) Stock Average recording its longest winning streak in two months, after U.S. housing starts jumped to a four-year high and the yen weakened.

Honda Motor Co. (7267), a carmaker that gets 44 percent of its sales in North America, jumped 4 percent. Komatsu Ltd. (6301), a construction-machinery company that relies on China for 14 percent of its revenue, surged 4.7 percent after China’s third- quarter economic growth met estimates. Yaskawa Electric Corp. soared 6.7 percent after the servomotor producer’s equity rating was raised to buy at BNP Paribas SA.

The Nikkei 225 gained 2 percent to 8,982.86 at the 3 p.m. close in Tokyo, rising for a fourth consecutive day. Volume was a third above the 30-day average. The broader Topix (TPX) Index rose 1.7 percent to 752.30, with all 33 of the gauge’s industry groups advancing. Prime Minister Yoshihiko Noda yesterday ordered his Cabinet to draw up economic stimulus measures by November to fight persistent deflation.

“U.S. homes and car sales are rebounding from the plunge after the Lehman shock, and recovery momentum will be maintained,” said Mitsushige Akino, an executive officer at Ichiyoshi Investment Management Co., which oversees about 40 billion yen ($505 million). “There are rising expectations the government will put strong pressure on the Bank of Japan for further easing to overcome deflation.”

The Topix has gained 4.6 percent from Sept. 6, when the European Central Bank initiated a global wave of stimulus, with the U.S. Federal Reserve and the Bank of Japan following suit. Shares on the equity gauge trade at 0.90 times book value, compared with 2.25 for the Standard & Poor’s 500 Index and 1.54 for the Stoxx Europe 600 Index.

U.S. Housing

Futures on the S&P 500 were little changed today. The gauge advanced 0.4 percent yesterday after housing starts jumped 15 percent to an annualized 872,000 last month, exceeding all estimates in a Bloomberg survey. Housing starts gained the most since two months before the collapse of Lehman Brothers Holdings Inc. in 2008. Tomorrow is the 25th anniversary of the Black Monday stock-market crash, the biggest single-day equity decline in history.

U.S. vehicle sales rose last month to a seasonally adjusted annualized rate of 14.9 million, the highest since March 2008, from 14.5 million in August, the U.S. Department of Commerce reported on Oct. 2.

The Japanese currency fell against all of its 16 major counterparts as expectations increased the Bank of Japan will boost stimulus measures at the end of the month.

Yen Weakens

The yen depreciated to as low as 79.22 against the dollar today in Tokyo, compared with 78.64 at the close of stock trading yesterday. Japan’s currency weakened to 103.85 against the yen from 102.94. A weaker yen boosts overseas income at Japanese companies when repatriated.

Honda jumped 4 percent to 2,557 yen. Canon Inc., a camera maker that gets 80 percent of its revenue overseas, rose 3 percent to 2,619 yen.

Pressure for stimulus is rising as the Bank of Japan at its end of the month policy meeting will release economic projections expected to show consumer prices, excluding fresh food, missing a 1 percent inflation goal in the next two fiscal years, people familiar with the matter said on condition of anonymity because the discussions are private.

“More investors in the stock and currency markets hope that Japan will undertake drastic stimulus measures like the U.S. and Europe, as the BOJ’s easing measures have so far not been enough,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about $76 billion.

China Growth

Exporters to China gained after the nation’s Bureau of Statistics today said economic growth expanded an annualized 7.4 percent in the third quarter, meeting analyst estimates, compared with a 7.6 percent rate in the three months prior. It was the seventh quarter of slowdown, with signs of a pickup last month.

Komatsu climbed 4.7 percent to 1,705 yen. Murata Manufacturing Co., an electronic-parts maker that depends China and Taiwan for half of its sales, gained 2.8 percent to 4,115 yen.

Yaskawa Electric (6506) jumped 6.7 percent to 592 yen after its investment rating was raised to buy from reduce at BNP, which said “monthly motion control orders bottomed earlier than expected.”

Metal producers gained the most among the Topix’s 33 industry groups after the London Metal Exchange Index of prices for six industrial commodities including copper and zinc rose 1.3 percent yesterday, the biggest gain since Sept. 25. Mitsubishi Materials, Japan’s third-largest copper producer, climbed 3 percent to 242 yen. Toho Zinc Co. jumped 4.8 percent to 283 yen.

The Nikkei Stock Average Volatility Index (VNKY) jumped 5.6 percent to 18.82, indicating that traders expect a swing of 5.4 percent on the equity benchmark in the next 30 days.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@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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