Nikkei 225 Index Rises as Government Sells Yen; Hitachi Advances

Japan’s Nikkei 225 Stock Average advanced for the first time in three days after the government sold yen, boosting prospects for exporters’ earnings. Mining and energy companies slipped.

Canon Inc., which gets 80 percent of its sales abroad, climbed 1 percent. Hitachi Ltd. rose 1.7 percent after a person familiar with the matter said its in talks with Mitsubishi Heavy Industries Ltd. to merge some businesses, following a Nikkei newspaper report on the possible deal. Inpex Corp., Japan’s largest energy exploration company, declined 2.1 percent after crude oil prices dropped.

The Nikkei 225 rose 0.2 percent to 9,659.18 at the 3 p.m. market close in Tokyo. The broader Topix index fell for a third day, ending 0.1 percent lower at 826.36 after advancing as much as 1.1 percent. The indexes pared gains as oil prices slipped.

“The intervention was timely and concerns about the yen’s appreciation eased, however, that wasn’t great enough to erase investors’ worries,” said Masaru Hamasaki, who helps oversee the equivalent of $18 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “Gains in stocks were limited as people still want to identify whether intervention will be continued.”

The yen dropped against all 16 of its major counterparts, falling to 79.41 against the dollar while the stock market was open, the lowest level since July 14, compared with 77.15 at the close of stock trading in Tokyo yesterday. Against the euro, the yen slipped to 113.37 from 109.65. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

Canon, Nintendo

Exporters advanced on easing concerns the yen, which had approached a postwar high against the dollar, will hurt overseas earnings. Canon closed at 3,725 yen. Toyota Motor Corp., the world’s largest carmaker, advanced 0.6 percent to 3,140 yen. Nintendo Co., the game maker which receives more than 80 percent of its revenue outside Japan, climbed 1.1 percent to 11,950 yen.

The Bank of Japan expanded its asset-purchase fund to 15 trillion yen ($189 billion) from 10 trillion yen, according to a statement in Tokyo today. It also expanded a credit facility by 5 trillion yen to 35 trillion and kept its benchmark interest rate near zero. It ended the meeting a day earlier than scheduled after the government intervened.

It was the first time the central bank expanded the asset-buying fund, its main policy tool, since the March earthquake and tsunami. The fund buys financial assets ranging from government bonds to real-estate investment trusts.

Swiss Action

Japan’s Switzerland, also contending with a stronger currency, unexpectedly cut interest rates and pledged to boost the supply of the franc yesterday.

In the U.S., the Standard & Poor’s 500 Index advanced 0.5 percent to 1,260.34 yesterday, snapping a seven-day decline, amid speculation the Federal Reserve may consider another economic stimulus program to prevent a recession.

The Wall Street Journal reported three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth.

“If investor sentiment improves because of easing monetary policies in the U.S., their tolerance for risk will increase,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co.

Hitachi Ltd., advanced 1.7 percent to 471 yen. Mitsubishi Heavy, Japan’s largest maker of heavy machinery, leapt 3.4 percent to 361 yen.

Merger Talks?

Both companies said they’re not holding talks to merge some businesses, hours after the president of Hitachi said that a deal was being discussed.

“Greater integration of businesses is very good for Japanese industries as a whole,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “We should pay attention to how much synergy the merger will create.”

Companies which reported higher profits advanced.

Konami Corp., a game developer, surged 5.1 percent to 2,295 yen, the most on the Nikkei. Net income more than tripled to 4.04 billion yen in the April-June period from 1.27 billion yen a year earlier, the company said in a statement to the Tokyo Stock Exchange.

Japan Steel Works Ltd., a maker of machinery for castings, jumped 3.4 percent to 545 yen. It reported net income surged 94 percent to 5.61 billion yen in the quarter ended June 30.

Among the 820 Japanese companies in the Topix index that posted quarterly earnings results since July 11, 142 beat the average analyst profit estimate, while 83 reported disappointing results, data compiled by Bloomberg show.

Stocks pared gains in the last 20 minutes before the market close, dragged down by mining companies. Crude for September delivery declined 0.5 percent to $91.51 a barrel in electronic trading in New York.

Inpex closed at 572,000 yen. Japan Petroleum Exploration Co., the second-biggest oil driller, lost 1.6 percent to 3,770 yen.

-- Editors: Andrew Hobbs, Rebecca Keenan

Before it's here, it's on the Bloomberg Terminal. LEARN MORE