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Japan Stocks Rise on Optimism U.S Will Avoid Fiscal Cliff

Japanese stocks rose, with the Nikkei 225 Stock Average reaching a seven-month high, on optimism U.S. lawmakers will reach a budget compromise to avoid the so-called fiscal cliff. Toyota Motor Corp. rose after U.S. services and factory data beat estimates.

Toyota, which counts on North America for 25 percent of its revenue, gained 1 percent. Canon Inc. (7751), the world’s biggest camera maker by sales, rose 2.6 percent on a Wall Street Journal report the company plans to triple its China sales in five years. Renesas Electronics Corp. climbed 0.7 percent amid optimism lenders will relax terms on emergency loans to the chipmaker.

The Nikkei 225 gained 0.8 percent to 9,545.16 as of the 3 p.m. close of trading in Tokyo. The equity gauge capped the biggest monthly gain since February last month on speculation Japan’s opposition will win the Dec. 16 election and call for more stimulus. The broader Topix Index climbed 0.9 percent to 788.74, with about four stocks rising for each that fell.

“Investors are optimistic that the U.S. is slowly recovering,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about $6.3 billion. “The U.S. should be able to reach some kind of agreement on the fiscal cliff issue and we’ll see a soft landing, so it’s good to buy stocks that get sold off on that theme, like exporters.”

The Topix traded at 0.9 times book value today, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Europe Stoxx 600 Index. A number less than one means that companies can be bought for less than the value of their assets.

Crossing the Aisle

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The gauge rose 0.2 percent yesterday as a few dozen Republicans joined a bipartisan call to break the impasse between President Barack Obama and House Speaker John Boehner over taxes for the highest-earning Americans, signing a letter calling for exploration of “all options.” Obama told a business group that the budget debate could be solved in about a week if Republicans move.

U.S. orders for equipment such as computers and electrical gear climbed in October by the most in eight months, indicating manufacturing is stabilizing heading into the looming fiscal cliff, a series of spending cuts and tax increases that will take effect unless a budget deal is reached. Service industries unexpectedly grew at a faster pace in November.

Toyota, the world’s biggest automaker by market value, gained 1 percent to 3,535 yen. Honda Motor Co. (7267), a carmaker that counts North America as its biggest source of revenue, increased 1.6 percent to 2,747 yen.

Canon Climbs

Electrical appliance makers contributed the most to the Topix’s advance. Canon climbed 2 percent to 3,000 yen. The company plans to increase annual sales in China to $10 billion over five years from a current $3 billion, the Wall Street Journal reported, citing managing director Hideki Ozawa.

Renesas advanced 0.7 percent to 291 yen. Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. will decide as early as this week to extend repayment periods and cut interest rates, three bank officials with knowledge of the matter said. The supplier to Apple Inc. and Nintendo Co. is cutting jobs and considering closing or selling factories as demand for its microchips declines.

The Nikkei 225 (NKY) is trading at its highest level since April 26, with its relative strength index at 70.52. Some investors view a reading above 70 as a signal the gauge is overbought.

The Nikkei Stock Average Volatility Index lost 2 percent to 17.25 today, indicating traders expect a swing of about 4.9 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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

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