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Japanese Stocks Advance on Corporate Alliances, China Outlook

Dec. 27 (Bloomberg) -- Japanese stocks rose for the first time in three days as companies announced alliances and amid speculation China’s interest-rate increase will not drag down share prices.

Elpida Memory Inc., the world’s third-largest maker of computer-memory chips, advanced 1.6 percent after a report said it is in talks with Taiwanese semiconductor companies on a business tie-up. Canon Inc. and Hitachi Ltd. climbed at least 0.7 percent after the Nikkei newspaper said Taiwan’s Hon Hai Precision Industry Co. plans to acquire control of their liquid-crystal display venture. Fanuc Corp., Japan’s largest maker of industrial robots, gained 1.5 percent.

The Nikkei 225 Stock Average rose 0.8 percent to 10,355.99 at the close in Tokyo. The broader Topix index gained 0.3 percent to 904.68 with about four stocks advancing for every three that fell. The total value of stocks traded on the Tokyo Stock Exchange’s first section was 832 billion yen ($10 billion), the lowest level since Jan. 4.

“There’s selective buying on company news,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which manages about $57 billion. “The business environment for manufacturers, especially semiconductor-related makers, is gradually getting better. China’s interest-rate increase had been expected, I don’t see an impact on the market.”

The Topix has declined 0.3 percent in 2010, compared with gains of 13 percent by the S&P 500 and 11 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 15.7 times estimated earnings, compared with 14.7 times for the S&P and 12.5 times for the Stoxx.

Elpida Climbs

Elpida Memory advanced 1.6 percent to 942 yen. Kyodo News said the company is in talks with Taiwan semiconductor companies including Powerchip Technology Corp. for mergers and tie-ups.

Hitachi climbed 0.7 percent and Canon rose 0.9 percent after the Nikkei newspaper said Hon Hai Precision Industry Co. of Taiwan plans to acquire control of a liquid-crystal display venture between Hitachi and Canon for 100 billion yen.

In China, the Shanghai Composite Index, which tracks the bigger of the country’s stock exchanges, climbed as much as 1.5 percent to 2,876.811 in early trading on speculation a second interest-rate increase since mid-October will curb inflation. Chinese shares fell after Japan’s market closed.

Fanuc, which gets more than 50 percent of its revenue from Asian countries outside Japan, gained 1.5 percent to 12,500 yen. TDK Corp., an electronics maker that counts China as its largest market, increased 1.8 percent to 5,730 yen. Hitachi Construction Machinery Co., the world’s biggest maker of large excavators, rose 1.6 percent to 1,958 yen. Komatsu Ltd., a maker of earth movers that gets about 20 percent of its sales in China, rose 0.7 percent to 2,486 yen.

China’s Interest Rate

“There was no surprise in China’s interest rate increase,” said Mitsushige Akino, who oversees about $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “Funds are likely to flow into Japan from emerging markets” on the outlook for further monetary tightening.

China’s benchmark one-year lending rate was raised by 25 basis points to 5.81 percent. The one-year deposit rate climbed by the same amount to 2.75 percent the People’s Bank of China said in a one-sentence statement on its website on Dec. 25. The change became effective yesterday.

“There’s a sense of hope that China will not do things that slow the nation’s economy while it raises interest rates,” said Ikuo Mitsui, who helps manage $270 million at Vivace Capital Management Co.

Dai Nippon Printing Co., a provider of printing services, rallied 1.8 percent to 1,122 yen. The company will triple production of film used for lithium-ion batteries and solar cells, the Nikkei newspaper reported, without saying where it got the information.

To contact the reporter on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net.

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

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