Japan’s Topix Rises Second Day as Geopolitical Risks Ease

Japan’s Topix index rose, extending the biggest gain in almost four months yesterday, as investor relief over easing tensions in Ukraine spread to the world’s second-biggest equity market.

Pacific Metals Co. jumped 3.9 percent ahead of its earnings report. NGK Insulators (5333) Ltd. gained 3.6 percent after Credit Suisse AG raised its share-price target for the electronic-parts maker. Mixi Inc. surged 20 percent, with the social-network operator closing at its upper limit for a second day after raising its first-half forecast. Ebara Corp. slumped the most on the Nikkei 225 Stock Average (NKY) after the pumpmaker posted a loss.

The Topix added 0.4 percent to 1,257.69 at the close of trading in Tokyo, with all but three of 33 industry groups gaining. The measure jumped 2 percent yesterday, the most since April 16. The Nikkei 225 rose 0.2 percent today to 15,161.31. The yen fell 0.1 percent to 102.29 per dollar after sliding 0.2 percent the day before.

“Geopolitical risks have calmed down but they are far from over,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which oversees about $474 billion in assets. “When news first comes out, everyone starts avoiding risk at once, but then slowly people start getting used to the situation. They see that the world continues to turn, and monetary easing continues, so it’s easy for funds to flow back into stocks again.”

Futures on the Standard & Poor’s 500 Index increased 0.2 percent. The underlying equity gauge gained 0.3 percent yesterday, capping its first back-to-back advance in two weeks, after reports indicated Russia intended to de-escalate the conflict in Ukraine and amid optimism U.S. airstrikes will push back militants in Iraq.

Ukraine, Iraq

The Stoxx Europe 600 Index jumped the most since April yesterday, climbing 1.4 percent. Russia’s Micex Index (INDEXCF) rallied the most in almost six weeks with a 1.8 percent advance.

Ukrainian President Petro Poroshenko said yesterday there would be an international humanitarian mission to the city of Luhansk under the auspices of the Red Cross, involving the U.S., the European Union and Russia. Earlier, Russian Foreign Minister Sergei Lavrov said agreement had been reached with Ukraine on providing aid.

In the Middle East, President Barack Obama gave full U.S. support for Iraq’s president to form a new government hours after embattled Prime Minister Nouri al-Maliki rejected stepping aside for a successor.

No Panic

“Geopolitical risk in Ukraine and Iraq isn’t something to panic about right now, and shares have sold off too much on it,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo.

Pacific Metals jumped 3.9 percent to 375 yen, the most on the Nikkei 225. The company reported after the close of trading that first-quarter profit quadrupled.

NGK Insulators jumped 3.6 percent to 2,643 yen. Credit Suisse raised its share-price target on the stock to 2,820 yen from 2,440 yen, while maintaining its outperform rating.

Mixi surged 20 percent to 6,110 yen after being untraded until the close. The shares extended yesterday’s 16 percent increase after the company raised its first-half net-income forecast to 8 billion yen from 2.8 billion yen. The social-networking site operator said today that it will introduce characters from Line Corp.’s chat messaging app in its “Monster Strike” games.

Ebara sank 3.7 percent to 595 yen, the biggest drop on the Nikkei 225. The company reported a first-quarter loss of 1.87 billion yen, saying orders fell due to declines in the hydroelectric and wind-power businesses.

The Topix (TPX) traded at 1.2 times book value today, compared with 2.6 for the S&P 500 and 1.8 percent for the Stoxx 600 yesterday. Volume on the Japanese gauge was 22 percent lower than the 30-day average today amid the Obon holiday period.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Cheng Leng in Tokyo at cleng3@bloomberg.net

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

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