Japanese Stocks Gain on U.S. Housing Data, Stimulus Hopes

Japan’s Topix Index halted a three- day advance, with the gauge finishing the day little changed, as brokerages and utilities retreated after a rally fueled by speculation elections next month will yield a new government.

Daiwa Securities Group Inc. (8601) fell 1.4 percent after gaining 13 percent in the past three days as polls showed an opposition party pushing for more stimulus may win elections called last week. Kansai Electric (9503) Power Co. sank 4 percent. Osaka Securities Exchange Co. rose 1.9 percent after shareholders approved its merger with Tokyo Stock Exchange Group Inc.

The Topix fell less than 0.1 percent to close at 762.04. The gauge yesterday capped the biggest gain in a three-day period since March 2011 as the yen weakened amid speculation the opposition Liberal Democratic Party will advocate for looser monetary policy. The Nikkei 225 Stock Average (NKY) dropped 0.1 percent to 9,142.64 today.

“Share prices right now pretty much reflect a new government,” said Seiji Iwama, who manages about 45 billion yen ($554 million) at Daiwa SB Investments Ltd., a unit of Daiwa Securities Group Inc. in Tokyo. “Now the focus is shifting on to the question of whether the U.S. can deal with its fiscal cliff.”

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The gauge gained 2 percent yesterday as sales of previously owned U.S. homes climbed in October. President Barack Obama expressed confidence Congress can reach a budget deal to avoid $607 billion of automatic tax increases and spending cuts that, if allowed to come into force, might push the country into a recession next year.

France Cut

In Europe, France lost its top credit rating with Moody’s Investors Service, dealing a blow to President Francois Hollande’s efforts to show budget credibility as Europe’s second-largest economy stalls. The move follows Standard & Poor’s January downgrading of the country.

Japanese shares erased gains after the Bank of Japan refrained from adding to stimulus, keeping its asset-purchase fund at 66 trillion yen and its credit-lending program at 25 trillion yen. All of 22 economists surveyed by Bloomberg forecast no change.

Brokerages dropped today, retreating after an index of the shares gained 10 percent in the three days through yesterday, the most among the Topix’s 33 industry groups.

Daiwa Securities slid 1.4 percent to 345 yen today. Ichiyoshi Securities Co. slumped 1.7 percent to 471 yen.

Bourse Merger

SBI Holdings Inc., which operates an alternative trading platform that competes with Japan’s traditional exchanges, led declines among brokerages. The shares dropped 2 percent to 635 yen after shareholders of the country’s two biggest bourses agreed to a merger.

Osaka Securities climbed 1.9 percent to 326,000 yen as owners of the shares approved a merger with Tokyo Stock Exchange Group Inc. The tie-up is the first step by Japan’s government to create a national exchange trading stocks, commodities and other securities to cope with equity volumes that have shrunk by more than 3 percent since 2005 as trading shifts to greater China.

Kansai Electric lost 4 percent to 714 yen. The stock gaining 18 percent in the past three days on speculation elections will yield a win for the LDP, which supported the nuclear industry during in its five decades in power.

Shikoku Electric Power Co., which jumped 24 percent in the same period sank, 3.4 percent to 1,040 yen.

Shipping lines climbed the most among the Topix’s 33 industry groups today after the Baltic Dry Index (BDIY), a measure of hauling rates for commodities, jumped 1.7 percent yesterday, rising for a seventh day.

Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line by revenue, jumped 3.6 percent to 204 yen. Kawasaki Kisen Kaisha Ltd. rose 1 percent to 105 yen.

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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