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Mitsubishi’s $600 Million Buyback Plan Boosts Shares in Tokyo

Mitsubishi Corp. (8058) said it will buy back as much as 60 billion yen ($589 million) of its stock, becoming the second trading house in Japan this year to announce a repurchase. The shares rose.

Mitsubishi will buy back as many as 40 million shares, or about 2.4 percent of its stock outstanding, according to a statement today. The purchase will begin tomorrow and end July 31, Mitsubishi said.

The shares gained as much as 7.8 percent to 1,960 yen, the most since March 16, 2011, and traded at 1,958 yen as of 1:35 p.m. in Tokyo. The stock has lost 3 percent this year, compared with an 11 percent decline in the Topix index.

As the China-led, decade-long rally in commodity prices winds down, Japanese trading houses are left with excess cash and a need to boost attractiveness to investors. Shares of the traders have fallen short of gains in Japanese stocks since Shinzo Abe became prime minister 16 months ago.

Mitsubishi’s buyback plan comes on top of a higher-than-forecast dividend for last year. Japan’s biggest trader said today it posted a profit of 444.8 billion yen, exceeding its own 420 billion yen target. This allows a payout of 68 yen a share, 4 yen more than forecast on Feb. 4, Mitsubishi said.

Mitsubishi said it expects to pay a 70 yen dividend for the year ending March 31, 2015, of which 60 yen will be fixed and the rest based on earnings performance. The fixed portion is made up of the 50-yen base that Mitsubishi promises to pay each year, plus a 10-yen bonus to mark its 60th anniversary.

Mitsui & Co., Japan’s second-largest trader, bought back 50 billion yen of stock in February, the first repurchase in more than a decade.

To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Indranil Ghosh

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