Japanese Stocks Rise as Economic Data Fans Stimulus Bets

Nikkei Gains 23 Percent in 2012, First Annual Gain in 3 Years
The closing figures of the Nikkei 225 Stock Average, top right, and the Topix Index, second from right, are displayed on an electronic board behind guests during a ceremony marking the last trading day of the year at the Tokyo Stock Exchange (TSE) in Tokyo. Photographer: Kiyoshi Ota/Bloomberg

Japanese stocks rose, with the Nikkei 225 Stock Average capping its biggest yearly advance since 2005, as the yen weakened after consumer prices and industrial production data fueled speculation the central bank will respond to calls for more stimulus.

Toyota Motor Corp. gained 1.9 percent to its highest close in two years. Toshiba Corp. jumped 5 percent after saying it’s in talks to sell its stake in an atomic-power unit. Tokyo Electric Power Co., owner of the reactors at the center of last year’s nuclear disaster, fell 6.4 percent after being sued by U.S. sailors who claim they were exposed to radiation.

The Nikkei 225 gained 0.7 percent on the year’s last trading day to close at 10,395.18, the highest since March 10, 2011. The measure climbed 23 percent in 2012. The broader Topix Index increased 0.7 percent to 859.80 today, with about eight stocks rising for every seven that fell.

“We’ve entered a positive cycle of a weaker yen and higher stock prices,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “We’re likely to see more capital flowing in from investors as the risk of not owning Japanese stocks becomes stronger.”

The Topix has risen about 19 percent since Nov. 14, when the former government said it would hold a general election in December and as a more pro-stimulus Liberal Democratic Party, led by Shinzo Abe, took power. Japan’s markets are shut for the first four days of next week for the New Year holidays.

The gauge trades at 1 times book value, meaning that companies can be bought for roughly the value of their assets. The Standard & Poor’s 500 Index trades for 2.1 times book value.

Fiscal Cliff

Futures on the S&P 500 were little changed today after House Republicans announced the chamber will meet on Dec. 30 -- its first Sunday session in more than two years -- as lawmakers seek a budget deal before a year-end deadline. Unless a compromise is reached, more than $600 billion in automatic tax increases and spending cuts will come into effect in January.

Exporters rose after the yen fell as worsening consumer price and output data boosted the case for increasing monetary and fiscal stimulus to spur growth. Abe has called for unlimited monetary easing and a 2 percent inflation target in a bid to revive the economy, which last quarter fell into its fifth technical recession in 15 years.

Toyota, the world’s biggest carmaker, rose 1.9 percent to 4,005 yen, providing the single biggest boost to the Topix index. The automaker rose 56 percent this year.

Honda Motor Co. gained 1.1 percent today to 3,145 yen. Canon Inc., the world’s biggest camera maker, increased 2.1 percent to 3,340 yen.

Yen Forecast Cut

The yen touched 86.64 per dollar today, the weakest since Aug. 3, 2010. Forecasts for Japan’s currency were cut by JPMorgan Chase & Co. and Nomura Holdings Inc., which cited Abe’s plan to spur inflation.

Consumer prices excluding fresh food fell 0.1 percent from a year earlier in November, the statistics bureau said today in Tokyo. A separate report showed industrial production fell 1.7 percent from October. The slide was worse than all 27 estimates in a Bloomberg News survey with a median forecast of a 0.5 percent decline.

Among other stocks that rose, Toshiba jumped 5 percent to 337 yen. The company is in talks to sell a stake in its Westinghouse Electric atomic-power unit as industry growth slows, Toru Ohara, a spokesman for Tokyo-based Toshiba, said.

Gains in the Topix were limited as Tokyo Electric Power led a decline by power suppliers. The utility lost 6.4 percent to 206 yen after a report it is being sued by eight U.S. sailors claiming they were exposed to radiation and the utility lied about the dangers.

The Nikkei 225’s 14-day Relative Strength Index, a measure of trading momentum, rose to 79 today. Some investors view a reading above 70 as a sign the market is overbought.

The Nikkei Stock Average Volatility Index fell 3.1 percent to 22.45, indicating traders expect a swing of about 6.4 percent on the gauge over the next 30 days. Trading volume on the Nikkei 225 was about 24 percent above the 30-day average.

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