Japan Stocks Rise as U.S. Payrolls Top Pre-Recession Peak

Japanese stocks rose, with the Topix (TPX) index extending last week’s gain, after data showed U.S. payrolls exceeded their pre-recession peak for the first time in May.

Mazda Motor Corp. (7261), an automaker that gets about 30 percent of its revenue in North America, added 1.3 percent. Alps Electric Co., a maker of electronic parts, led the Nikkei 225 Stock Average higher after Mizuho Securities Co. raised its target price on the electronic-parts maker. Kumagai Gumi Co., a construction company, slumped 5.7 percent after saying an apartment complex it had built has defects.

The Topix added less than 0.1 percent to 1,234.78 at the close in Tokyo after jumping 2.8 percent last week. About nine stocks gained for every seven that fell. The Nikkei 225 increased 0.3 percent today to 15,124.00. Revised data showed Japan’s gross domestic product increased more than estimated in the first quarter.

“The U.S. jobs data, which was a key event, turned out good and gave the market confidence, while investors are concerned that shares have been overbought a bit,” said Takuya Takahashi, a senior strategist at Daiwa Securities Group Inc. “Two forces collided with each other today.”

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent. The equity measure gained 0.5 percent on June 6. The 217,000 advance in hiring followed a 282,000 gain in April, figures from the Labor Department showed. It marked the fourth consecutive month employment increased by more than 200,000, the first time that’s happened since early 2000. The jobless rate unexpectedly held at an almost six-year low of 6.3 percent.

Companies that do business in the U.S. gained, with Mazda adding 1.3 percent to 479 yen. Komatsu Ltd., a maker of construction machinery that gets 30 percent of its revenue in the Americas, climbed 2 percent to 2,355 yen.

Economic Growth

Japan’s gross domestic product grew an annualized 6.7 percent from the first three months of the year, the Cabinet Office said in Tokyo today, faster than a preliminary reading of 5.9 percent. The median forecast of economists in a survey by Bloomberg News had pointed to a downward revision in growth to 5.6 percent. The nation’s current-account surplus narrowed in April from a year earlier, separate data showed.

Increasing strength in business investment would help the economy rebound from a forecast contraction this quarter after a sales-tax increase in April. A task for Prime Minister Shinzo Abe is to ensure the recovery sustains momentum to weather a planned further rise in the levy.

Alps, Dentsu

Alps Electric gained 2.9 percent to 1,325 yen. The company’s target price was increased to 1,500 yen from 1,400 yen at Mizuho Securities.

Dentsu Inc. gained 2.5 percent to 4,275 yen after the advertising agency’s sales rose in May from a year earlier and Goldman Sachs Group Inc. recommended the shares.

Kumagai Gumi slumped 5.7 percent to 264 yen. Construction flaws in supporting pillars were found in a building completed in March 2003 in Yokohama, the company said in a statement to the stock exchange today. The residents have been asked to relocate to temporary shelters and further investigation is required, it said.

The Topix has fallen 5.2 percent this year, the worst performer among the 24 developed markets tracked by Bloomberg. The measure capped a world-beating rally last year as the Bank of Japan pressed ahead with its record monetary easing. The central bank is scheduled to meet June 12-13.

China’s exports gained 7 percent from a year earlier, the Beijing-based customs administration said yesterday. That topped the median estimate of 6.7 percent in a Bloomberg News survey of analysts. Imports unexpectedly fell 1.6 percent. The trade surplus widened to $35.92 billion.

The Topix traded at 1.2 times book value today, compared with 2.7 for the S&P 500 and 1.9 for the Stoxx Europe 600 Index at the end of last week.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, Jim Powell

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