Nikkei 225 Climbs Above 10,000 for First Time Since April

Japanese shares rose, pushing the Nikkei 225 Stock Average (NKY) above 10,000 for the first time since April, amid optimism the Bank of Japan will add easing tomorrow at the close of a two-day policy meeting. Steelmakers (TPIRON) advanced on prospects for more public works to stimulate the economy.

Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, jumped 6.1 percent amid bets for more monetary easing. Dai-Ichi Life Insurance Co., the nation’s second-biggest life insurer, advanced 9.1 percent. Toyota Motor Corp. gained 3.5 percent after the Nikkei newspaper reported the carmaker plans to raise its vehicle output next year. Canon Inc., the world’s largest camera maker, led exporters higher as the yen traded near a 20-month low against the dollar. Kobe Steel Ltd. soared 13 percent.

The Nikkei 225 gained 2.4 percent to 10,160.40 at the close of trading in Tokyo, the highest since March 28. The broader Topix Index climbed 2.8 percent to 839.34, with all but one of its 33 industry groups advancing. Volume on the two stock gauges was double the 30-day average.

“The Bank of Japan is likely to expand the asset- purchasing program to stimulate and sustain growth momentum,” Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the central bank, said in a Bloomberg Television interview. “We expect around 10 trillion yen, mainly by JGB purchasing. This kind of policy will encourage yen selling and support overseas investments into Japanese corporates.”

The benchmark Nikkei 225 climbed 17 percent since Nov. 14 when elections were called. Shares rose on expectations the Liberal Democratic Party, which returned to power at the polls last weekend, will raise spending and secure more easing from the central bank to boost the economy.

LDP Budget

The LDP and coalition partner Komeito have agreed to pass a supplementary budget possibly worth more than 10 trillion yen ($119 billion), the Nikkei newspaper reported. The BOJ will probably increase monetary stimulus tomorrow after a two-day policy meeting that starts today, 17 of the 21 analysts surveyed by Bloomberg estimated.

Banks provided the second-biggest boost to the Topix, after transport equipment companies and electronics makers, on speculation an increase in monetary easing will boost the economy.

Mitsubishi UFJ rose 6.1 percent to 435 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest bank by market value, gained 4.2 percent to 3,010 yen. Dai-Ichi Life jumped 9.1 percent to 113,200 yen.

The yen fell to its lowest level against the euro since August last year, and fell 0.2 percent to 84.35 to the dollar. A weaker Japanese currency raises exporters’ overseas income when repatriated.

Exporters Rise

Canon, which receives about 80 percent of its revenue overseas, gained 6.5 percent to 3,455 yen. Honda Motor Co., which counts North America as its biggest market, climbed 6.2 percent to 3,070 yen.

Toyota increased 3.5 percent to 3,850 yen, the second- biggest single boost to the Topix. The automaker will announce a boost to its production target to 9.9 million vehicles for 2013, the Nikkei reported.

Standard & Poor’s 500 Index futures climbed less than 0.1 percent today. The gauge rose 1.2 percent yesterday amid signs of progress by President Barack Obama and Republicans to reach a budget agreement to avert the so-called fiscal cliff, $600 billion in spending cuts and tax increases that will take effect unless a compromise is reached.

Plan B

Obama proposed a budget that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes in the next decade, according to a person familiar with the talks. House Speaker John Boehner said he will push a budget “plan B” that would include tax increases on income of more than $1 million, countering an offer from Obama who to raise rates on those earning more than $400,000.

Steelmakers recorded the second-biggest gain today among the Topix’s industry groups on expectations the LDP will push for more infrastructure projects. Kobe Steel soared 13 percent to 103 yen, while Nisshin Steel Holdings Co. gained 6.4 percent to 711 yen.

The Topix trades at 0.99 times book value, compared with 2.1 for the S&P 500 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.

The Nikkei Stock Average Volatility Index (VNKY) rose 8.5 percent to 18.62 today, indicating traders expect a swing of about 5.3 percent on the benchmark gauge over the next 30 days.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Zeb Eckert in Hong Kong at zeckert1@bloomberg.net

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

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