Japan Stocks Cap Five-Month Gain as Metals, Energy Shares Climb

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Japanese shares extended their monthly winning streak as metal producers and energy explorers led the advance.

Osaka Titanium Technologies Co. surged 9.2 percent after Credit Suisse Group AG boosted its share price target on the stock. Yahoo Japan Corp. jumped 12 percent after saying it’ll form an e-commerce alliance with Alibaba Group Holdings Ltd. Oil driller Inpex Corp. added 1.2 percent after crude advanced amid signs the global supply glut is easing.

The Topix index rose 0.1 percent to 1,673.65 at the close of trading in Tokyo, after falling as much as 0.2 percent. The gauge capped a 1.6 percent gain this week and a 5.3 percent advance for the month. The Nikkei 225 Stock Average today climbed 0.1 percent to 20,563.15, extending its longest rally since 1988. The yen strengthened to 123.93 per dollar after trading at a 12-year low yesterday.

“The currency has firmed up a bit which is good, as people were starting to talk about the weaker yen no longer being a positive,” said Andrew Clarke, director of trading at Hong Kong brokerage Mirabaud Asia Ltd. “Also partly people are plumping for Japan as a long-term play versus China now.”

Finance Minister Taro Aso said the yen’s drop in recent days was “rough,” and the government will continue to monitor its movements. Economy Minister Akira Amari said the yen hasn’t reached levels considered excessively weak. There is debate as to whether Bank of Japan easing and an anticipated Federal Reserve rate increase have been priced into the currency’s drop since 2012.

The 14-day Relative Strength Index for the Topix was at 73.5 on Friday, the fourth day above the 70 level that some traders take as a sign shares are poised to drop.

Overheating Signs

“The wind behind the weaker yen’s sails has subsided a little,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo. “The only reason for Japanese stocks to fall is that they’ve kept on rising so far. Overbuying and the fact that we’re facing the weekend are the main factors.’

The central bank’s key gauge of inflation slowed to zero as the continued slump in oil prices weighs on efforts to generate inflation. Consumer prices excluding fresh food and effects of last year’s sales-tax increase were unchanged from a year earlier in April.

U.S. stock futures lost 0.1 percent after equities slumped yesterday before data Friday that may show the economy contracted in the first quarter, while investors watch for progress on Greek debt talks.

Osaka Titanium surged 9.2 percent, while Toho Titanium Co. added 6.7 percent. Credit Suisse boosted the companies’ price targets and maintained their outperform ratings on expectations for increased capacity utilization.

Yahoo Japan soared 12 percent after saying it’s considering a partnership with Alibaba, which would offer support and lower fees for Japanese e-commerce companies looking to list on China-based Alibaba’s Tmall.

Oil gained a second day after U.S. crude inventories fell in the week ended May 22. Inpex climbed 1.2 percent.

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