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Japan’s Nikkei 225 Extends Six-Year High on U.S. Data

Photographer: Junko Kimura/Bloomberg

A man looks at an electronic board displaying stock prices at the Tokyo Stock Exchange in Tokyo. Close

A man looks at an electronic board displaying stock prices at the Tokyo Stock Exchange in Tokyo.

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Photographer: Junko Kimura/Bloomberg

A man looks at an electronic board displaying stock prices at the Tokyo Stock Exchange in Tokyo.

Japan’s Nikkei 225 Stock Average extended a six-year high as data showed the U.S. economic recovery is accelerating. The measure climbed above 16,000 for the first time since 2007 before paring gains.

Mitsubishi Motors (7211) Corp. jumped the most on the Nikkei 225 after raising its profit forecast. NKSJ Holdings Inc. (8630) increased 1.8 percent after Nomura Holdings Inc. boosted its price target on the insurer. Japan Tobacco Inc. dropped 2.2 percent after a report the head of its international business resigned.

The Nikkei 225 added 0.1 percent to 15,889.33 in Tokyo, its highest close since December 2007. The measure trimmed gains after rising as much as 1 percent to 16,029.65 in the morning session. The Topix index slid 0.3 percent to 1,257.55. The yen weakened 0.1 percent to trade at 104.22 per dollar. Markets were closed yesterday for a public holiday.

“The U.S. will probably lead the global economic recovery next year,” said Toshihiko Matsuno, a strategist at SMBC Friend Securities Co., a unit of Sumitomo Mitsui Financial Group Inc. “If the U.S. economy improves, then the yen will get weaker and that’s good for Japan. If the Nikkei 225 rises above 16,000, it indicates the market is entering a new stage of gains.”

Futures on the Standard & Poor’s 500 Index were little changed today. The equity measure added 0.5 percent yesterday. While Japanese markets were closed, data showed U.S. consumer spending rose in November by the most in five months and economic growth in the third quarter was faster than previously estimated.

IMF Outlook

The IMF is raising its outlook for the U.S. economy, as a budget deal in Washington and the Federal Reserve’s plan to taper its bond buying ease doubts about the future, IMF Managing Director Christine Lagarde said in an interview broadcast on NBC’s “Meet the Press.” The IMF predicted in October that the world’s largest economy would expand 2.6 percent next year. Lagarde didn’t set out any new projections.

Japan’s Cabinet Office released its economic report for December today. The report said “prices are holding firm,” dropping a reference to the word “deflation” for the first time since October 2009.

Mitsubishi Motors jumped 4.3 percent to 1,099 yen after boosting its net income forecast by 43 percent to 100 billion yen ($959.5 million), citing a weaker yen and cost cuts.

NKSJ gained 1.8 percent to 2,915 yen after Nomura raised its 12-month target price to 3,300 yen from 2,900 yen.

The Tokyo Stock Exchange Mothers Index of smaller stocks declined 2.2 percent today, while the Jasdaq Stock Index slipped 1 percent. Japan’s tax on share gains is set to double to 20 percent on Jan. 1.

“Individual investors wanting to sell in order to limit the increase in the capital-gains tax is a negative factor for stocks today,” SMBC’s Matsuno said.

Tepco Drops

Among other stocks that fell, Tokyo Electric Power Co. dropped 2.3 percent to 510 yen. The utility known as Tepco said it found radioactive water leaks in barriers near storage tanks at its Fukushima Dai-Ichi nuclear plant, according to a statement Dec. 22.

Japan Tobacco slid 2.2 percent to 3,290 yen after Sky News reported its head of international business Pierre de Labouchere resigned with immediate effect, citing a company statement.

The Topix (TPX) rose 46 percent this year, the most among 24 major developed markets tracked by Bloomberg, as Prime Minister Shinzo Abe and the Bank of Japan took steps to end 15 years of deflation. The gauge traded at 1.28 times book value today, compared with multiples of 2.63 for the S&P 500 and 1.80 for the Stoxx Europe 600 Index yesterday.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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