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Nikkei 225 Erases Loss on Speculation of BOJ Stimulus

Japan’s Nikkei 225 Stock Average (NKY) climbed for a sixth day after the yen weakened amid speculation the Bank of Japan will add stimulus at a meeting next week. The gauge fell earlier as companies including Mitsubishi Corp. cut profit forecasts.

Honda Motor Co. (7267), a carmaker that gets about 80 percent of its sales abroad, reversed early losses to finish the day up 1.1 percent. Jupiter Telecommunications Co. surged 18 percent on a report it will buy Japan Cablenet Ltd. to control half of the country’s cable television market. Mitsubishi dropped 1.8 percent, pacing declines among commodity traders.

“The yen is weakening further and there’s a strong expectation the BOJ will ease monetary policy,” said Akio Yoshino, who helps oversee the equivalent of $31 billion as chief economist at Amundi Japan Ltd. in Tokyo. “Expectations the BOJ may add to purchases of Exchange Traded Funds are growing.”

The Nikkei 225 Stock Average gained 0.1 percent to close at 9,010.71 in Tokyo. The benchmark reversed a decline of 1.5 percent after the yen weakened as investors interpreted a report showing declining Japanese exports as a sign the central bank would be under added pressure to ease policy. The broader Topix Index, which includes smaller companies less affected by currency fluctuations, lost 0.1 percent to 753.72.

Winning Streak

The Nikkei 225 jumped 5.5 percent last week, its biggest such rise since December, as reports on U.S. retail sales, housing starts and manufacturing beat estimates and China’s economy showed signs of stabilization. Shares on the gauge trade at 1.1 times book value, compared with 2.2 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

Exporters rebounded today after the yen depreciated to as low as 104.02 against the euro, compared with 103.76 at the close of stock trading on Oct. 19. Against the dollar, Japan’s currency fell to 79.63 from 79.35. A weaker yen boosts the value of overseas income for Japanese companies.

Honda gained 1.1 percent to 2,613 yen. Nintendo Co., a game console maker that gets more than 70 percent of its revenue from the Americas and Europe, climbed 1 percent to 10,450 yen.

Japan’s exports slid 10.3 percent last month, the most since May 2011, as shipments to China dropped amid a territorial dispute over islands in the East China Sea, a Finance Ministry report showed.

The data came after Economy Minister Seiji Maehara put pressure on the Bank of Japan yesterday, saying the nation is “falling behind” other countries in monetary stimulus and faces the threat of a credit-rating downgrade.

Jupiter Climbs

Jupiter Telecom surged by its daily limit of 15,000 yen, or 18 percent, to 97,700 yen after the Nikkei newspaper reported the company, controlled by KDDI Corp. and Sumitomo Corp., will acquire Japan Cablenet, a unit of KDDI, by March 2013.

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The gauge fell 1.7 percent on Oct. 19 after Microsoft Corp. and General Electric Co. reported earnings that missed estimates.

Japan’s current earnings season peaks next week, with 568 of the 1,672 Topix companies reporting results. Nintendo Co. and steelmaker JFE Holdings Inc. are among 126 companies scheduled to post this week.

Among shares that dropped today, Mitsubishi (8058) Corp. fell 1.8 percent to 1,404 yen after cutting its annual profit forecast by 34 percent and reducing its planned dividend. The trading house said Europe’s debt crisis and slower growth in China is pushing commodity prices below its anticipated range.

Amada Co. (6113) sank 1.7 percent to 409 yen after the maker of factory tools slashed its net income forecast by 58 percent for the year ending March 31, citing growth in China and other emerging countries.

The Nikkei Stock Average Volatility Index (VNKY) rose 5.7 percent to 19.02, indicating that traders expect a swing of 5.5 percent on the equity benchmark in the next 30 days.

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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