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Japan’s Topix Gains as Utilities Advance; Rakuten Tumbles

Japan’s Topix index rose, snapping seven straight days of declines, as power producers led gains. Yahoo Japan Corp. and Rakuten Inc. tumbled.

Tokyo Electric Power Co. surged 7.6 percent, leading utilities higher. Oki Electric Industry Co., which makes semiconductors and automated teller machines, jumped the most on the Nikkei 225 Stock Average after a report it would post an unexpected first-half profit. Yahoo Japan dropped 6.5 percent after saying it would scrap vendor fees for its shopping and auction websites, while rival Rakuten plunged 12 percent, the biggest decline in more than seven years.

The Topix climbed 0.2 percent to 1,150.13 at the close of trading in Tokyo, after falling as much as 0.7 percent. The Nikkei 225 Stock Average added 0.3 percent to 13,894.61. U.S. President Barack Obama reiterated he won’t negotiate with Republicans over raising the $16.7 trillion borrowing ceiling.

“Japanese shares may continue to be weak as there’s a high chance the U.S. will run into trouble resolving things before the debt-ceiling deadline,” said Nobuhiko Kuramochi, a deputy general manager at Mizuho Securities Co. “But valuations are looking cheap so it’s easier for investors to buy.”

The Topix traded at 1.20 times book value today, compared with 2.47 for the Standard & Poor’s 500 Index and 1.74 for the Stoxx Europe 600 Index yesterday.

Losing Streak

The Japanese gauge fell for seven days through yesterday, the longest losing streak since July 2012, as the yen advanced after a partial government shutdown stoked concern U.S. lawmakers wouldn’t raise the debt ceiling in time to prevent a default. Japan’s currency weakened 0.5 percent today to trade at 97.17 per dollar.

Power producers led gains among the 33 Topix subsectors today after falling the most yesterday. Tokyo Electric Power jumped 7.6 percent to 525 yen. Hokkaido Electric Power Co. gained 4.7 percent to 1,283 yen after losing 6 percent yesterday.

Oki Electric advanced 10 percent to 193 yen to post the biggest advance on the Nikkei 225. The company may report a profit of 1 billion yen for the first half of the fiscal year as Chinese ATM sales and a weaker yen contributed to earnings, the Nikkei newspaper reported. Oki Electric had forecast a 2.5 billion yen net loss.

Futures on the S&P 500 were little changed after the gauge slumped 0.9 percent to a one-month low yesterday. Without an increase to the borrowing limit, the U.S. will exhaust its borrowing authority on Oct. 17 and would run out of funds to pay all of its bills sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Debt Ceiling

Democratic lawmakers in the Senate are working on a strategy to allow Obama to raise the ceiling without requiring Republicans to vote in favor of an increase, according to Senator Richard Durbin, the second-ranking Democrat.

Among stocks that fell, Yahoo Japan tumbled 6.5 percent to 535 yen, the biggest drop on the Nikkei 225. Rakuten plummeted 12 percent to 1,196 yen. Yahoo Japan said it will eliminate fees and make it easier for shops to open on its online shopping service in a direct challenge to Rakuten, operator of the country’s largest Internet shopping mall.

Japan’s Government Pension Investment Fund, the world’s largest manager of retirement savings, isn’t ready for Abenomics, according to Takatoshi Ito, who heads an expert panel advising on public investments. The fund needs to reduce the risk of losses on its bond holdings should interest rates start to rise as the economy improves amid Prime Minister Shinzo Abe’s policies to end deflation, Ito said.

Big Promise

The Bank of Japan probably promised too much when it set a goal of lifting inflation to 2 percent within two years as history is not on its side, Takahiro Mitani, president of GPIF, said in June. Even in Japan’s bubble-economy period, inflation was only about 1 percent, Mitani said. It’s been over two decades since annual inflation in Japan exceeded 2 percent, according to the World Bank.

The nation’s current-account surplus unexpectedly shrank to a record low for an August, falling 64 percent from a year earlier to 161.5 billion yen ($1.7 billion), as overseas income dropped for the first time in nine months and the trade balance remained in deficit, the Finance Ministry said today.

The Topix may yield 1.9 percent in dividends in the next 12 months, up from 1.7 percent in the past year, according to data compiled by Bloomberg. The gauge’s 30-day historic volatility was at 18.20 today, compared with its five-year median of 19.33.

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