Japanese Stocks Reverse Losses as BOJ Expands Asset Purchases

Japanese stocks rose, reversing earlier declines and sending the Nikkei 225 Stock Average to a five-month-high, after the Bank of Japan unexpectedly expanded its asset purchases to spur growth.

Toyota Motor Corp. paced gains among exporters, increasing 1.8 percent after the yen weakened. Mitsubishi UFJ Financial Group Inc., the nation’s biggest publicly traded lender, added 1.3 percent. Sumitomo Rubber Industries Ltd., Japan’s second-biggest tiremaker by revenue, gained 1.8 percent after beating its earnings forecast.

The Nikkei 225 Stock Average gained 0.6 percent to 9,052.07, the highest close since Sept. 1. More than two shares rose for each that fell on the gauge, which fell as much as 0.3 percent earlier. The broader Topix Index increased 0.7 percent, reversing losses of as much as 0.4 percent.

“The BOJ finally moved while other central banks are promoting more monetary easing,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors like it and are buying stocks.”

Stocks fell earlier after Moody’s Investors Service cut ratings on Italy, Spain, Portugal and three other European countries. The move follows downgrades in the last two months by Standard & Poor’s and Fitch Ratings.

‘Knee-Jerk Impact’

“These sorts of things can have a negative knee-jerk impact,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The reality is we’ve been talking about this for so long that it should hardly be a surprise to anybody.”

Futures on the Standard & Poor’s 500 Index dropped 0.3 percent today. The index climbed 0.7 percent in New York yesterday as Germany and the European Commission welcomed Greek approval of austerity cuts demanded for a financial lifeline, signaling euro-area finance chiefs tomorrow will ratify a 130 billion-euro ($171 billion) bailout for the debt-stricken nation

Shares of Japanese lenders, developers and exporters rose after the Bank of Japan unexpectedly expanded a bond-purchase program to 65 trillion yen ($835 billion) from 55 trillion yen. After the announcement, the yen weakened to as low as 102.63 against the euro after earlier trading at 101.82.

Exporters, Banks Climb

Toyota rose 1.6 percent to 3,115 yen. Canon Inc., the world’s biggest camera maker, climbed 1.5 percent to 3,490 yen. Fanuc Corp., a maker of industrial robots, gained 1.8 percent to 13,450 yen.

Among banks and developers, Mitsubishi UFJ added 1 percent to 391 yen, while Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, climbed 1.1 percent to 2,594 yen. Tokyu Land Corp., a condominium builder, rose 5.1 percent to 352 yen.

Sumitomo Rubber rose 1.8 percent to 968 yen after posting 28.4 billion yen ($364 million) in full-year net income, beating its forecast by 42 percent on higher overseas sales.

The Topix has rallied 7.1 percent since the beginning of the year through yesterday amid optimism the U.S. economy is weathering the European debt crisis and central banks will relax monetary policy to spur growth. Of the 1,483 companies on the gauge that have reported earnings since Jan. 9, 260 missed analyst estimates, while 134 exceeded expectations, according to data compiled by Bloomberg.

Rakuten, MS&AD

Among stocks that declined, Rakuten Inc. fell 2.1 percent to 79,800 yen after the shopping-site operator posted a full-year loss of 1.14 billion yen, swinging from a profit of 35 billion a year earlier, citing charges tied to taxes and restructuring its credit-card business.

MS&AD Insurance Group Holdings Inc. slid 1.3 percent to 1,668 yen after projecting a 145 billion yen loss for the year ending March 31 due to claims from the Thai floods and reversal of deferred tax assets. It had earlier forecast a 6 billion-yen gain. Japan’s non-life insurers face a total of 900 billion yen for damages stemming floods last year in the Southeast Asian nation, according to the Nikkei newspaper.

The Nikkei 225 Volatility Index decreased 7.4 percent to 19.67, indicating traders expect a swing of about 5.3 percent on the benchmark gauge over the next 30 days.

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