Japanese Stocks Gain on U.S. Earnings, Death of Osama Bin Laden

May 2 (Bloomberg) -- Japanese stocks rose for a third day after U.S. companies reported better-than-expected earnings and President Barack Obama said Osama bin Laden is dead.

Toyota Motor Corp., the world’s largest carmaker, and Sony Corp., Japan’s biggest electronics exporter, both advanced at least 1.9 percent. Komatsu Ltd., the world’s No. 2 manufacturer of construction equipment, jumped 3 percent after rival Caterpillar Inc. posted earnings that beat estimates. Oil driller Inpex Corp. and other energy-related companies fell after crude prices dropped by the most in two weeks.

“The death of bin Laden eases some concern, but it’s hard to imagine it’ll lead to a reduction of risk in the Middle East, and so the market’s reaction may be transitory,” said Koichiro Nishio, a market analyst in Tokyo at SMBC Nikko Securities Inc. “The recovery of demand in the U.S. and other developed countries means a better environment for earnings.”

The Nikkei 225 Stock Average rose 1.6 percent to 10,004.20 at the 3 p.m. end of trading Tokyo, its highest closing level since March 11, when a record earthquake and tsunami struck the nation. The broader Topix gained 1.6 percent to 865.55, with about six times as many shares gaining as falling.

Obama confirmed the al-Qaeda leader was dead in an address from the White House, almost 10 years after the Sept. 11 attacks on New York and Washington that bin Laden orchestrated. Bin Laden was killed in a U.S. military operation, along with other members of his family, in a compound in Pakistan. He was 54.

In New York, futures on the Standard & Poor’s 500 Index expiring in June climbed as much as 1 percent to 1,372.70 today.

Oil Prices Drop

Oil dropped the most in two weeks in New York after news broke that bin Laden had been killed. Only the mining index, which includes Inpex and Japan Petroleum Exploration Co., declined among the Topix’s 33 industry groups.

Inpex, Japan’s largest oil and gas explorer, slumped 2.6 percent to 600,000 yen and Japan Petroleum Exploration, the No. 2, slid 1.3 percent to 3,900 yen. Crude for June delivery slipped as much as 1.6 percent to $112.11 a barrel in electronic trading on the New York Mercantile Exchange.

“In addition to U.S. companies having good earnings, Japanese companies’ earnings were not so bad. That’s improving investor sentiment,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “Excessive worries about the future of the economy and companies’ earnings are receding.”

Better Earnings

Komatsu climbed 3 percent to 2,924 yen after Caterpillar, the world’s largest maker of construction equipment, posted first-quarter profit that topped analysts’ estimates and raised its full-year earnings forecast, citing demand from developing countries. Hitachi Construction Machinery Co. advanced 2.1 percent to 2,007 yen and Kubota Corp., a maker of farming equipment, rose 1.4 percent to 781 yen.

Shares also rose after Japanese companies posted better earnings. Seiko Epson Corp. jumped 5.7 percent to 1,492 yen after forecasting net income will soar by 66 percent this fiscal year, buoyed by demand from China, India and other Asian countries.

Ebara Corp. surged 5.9 percent to 482 yen after reporting full-year net income that more than doubled its own forecast. Profit at the pump maker rose to 28.5 billion yen ($350 million) in the 12 months ended March 31, according to a preliminary earnings statement on April 28.

Panasonic Corp., the world’s largest maker of plasma televisions, increased 2.8 percent to 1,026 yen after it announced plans to cut almost 17,000 jobs over two years as part of an overhaul to restore profitability.

Sony, the maker of PlayStation game consoles that gets about 70 percent of its revenue overseas, gained 2.5 percent to 2,316 yen. Toyota, which gets a similar percentage of sales overseas, advanced 1.9 percent to 3,290 yen.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.