Japan’s Topix Index Caps First Monthly Advance This Year

Japan’s Topix index swung to a gain in the final minute of trading, capping the first monthly increase this year, as tiremakers and power producers climbed.

Tokyo Electric Power Co. surged as much as 14 percent on a report the government is considering revising the law for compensation after nuclear accidents. The utility at the center of the 2011 Fukushima disaster then pared gains and closed 5.4 percent higher. Bridgestone Corp., Asia’s biggest manufacturer of tires, added 1.7 percent. Credit Saison Co. extended yesterday’s slump after Credit Suisse Group AG cut its target price for the consumer lender.

The Topix added less than 0.1 percent to 1,201.41 at the close in Tokyo after rising as much as 0.4 percent and dropping 0.2 percent. An equal number of shares rose as fell. The measure posted a 3.4 percent gain this month, its first since December. The Nikkei 225 Stock Average today dropped 0.3 percent to 14,632.38. A report today showed inflation accelerated in April following an increase in Japan’s consumption levy.

“People would’ve built their investment strategies around the assumption that data from the current quarter would be bad after the sales-tax increase,” said Tomomi Yamashita, who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. “Shares can’t properly rise until we see data from the July-to-September quarter showing the economy has really started improving.”

Japan’s Inflation

Japan’s consumer prices gained the most since 1991, swelled by the levy increase and the Bank of Japan’s unprecedented stimulus. Inflation excluding fresh food accelerated to 3.2 percent year on year in April, the statistics bureau reported, compared with the 3.1 percent median estimate of 32 economists in a Bloomberg News survey.

Industrial production fell 2.5 percent in April compared with the previous month, more than the 2 percent decline estimated by economists.

“There’s more confidence in the economic fundamentals,” said Juichi Wako, a Tokyo-based equity strategist at Nomura Holdings Inc., the nation’s biggest brokerage. “The domestic economy may stall a bit this quarter because of the sales-tax increase, but the view that it’s only temporary is spreading.”

Tokyo Electric Power jumped 5.4 percent to 413 yen after a Nikkei newspaper report the government will begin revising the law governing damages paid in the event of a nuclear accident. The report cited remarks made by Yoshitaka Sakurada, vice minister for education and science, at the Diet today.

Electric Power Development Co. gained 2.6 percent to 3,020 yen, while Hokkaido Electric Power Co. climbed 1.4 percent to 747 yen.

Rubber Futures

Bridgestone added 1.7 percent to 3,676 yen to lead gains on the Topix Rubber Products Index, which jumped 1.4 percent. Toyo Tire & Rubber Co. climbed 0.3 percent to 890 yen. Rubber for November delivery on the Tokyo Commodity Exchange capped a 3.4 percent decline this month, its second monthly drop.

Credit Saison slid 3.5 percent to 1,831 yen after Credit Suisse cut its target price for the shares on May 28. The brokerage reduced estimates to 1,800 yen from 2,480 yen.

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The measure advanced to a record yesterday even after a report showed the economy last quarter suffered its first contraction in three years.

Monetary easing and government spending drove a world-beating 51 percent jump for the Topix in 2013. The index fell 7.7 percent this year, the most among 24 developed markets tracked by Bloomberg, amid concern the measures won’t be enough to revive the economy.

The Japanese gauge traded at 1.17 times book value today, compared with 2.68 for the S&P 500 and 1.90 for the Stoxx Europe 600 Index yesterday. Volume on the Topix was 48 percent higher than the 30-day average today.