Nikkei 225 Caps Longest Weekly Winning Streak Since 1988

 Japanese shares rose a third day, with the Nikkei 225 Stock Average capping its longest weekly win streak since December 1988, as the yen slid and the Cabinet approved 10.3 trillion yen ($116 billion) in stimulus to speed the economic recovery.

Canon Inc., the world’s biggest camera maker, added 2.3 percent. Fast Retailing Co., Asia’s leading apparel chain, climbed 4.8 percent after raising its profit forecast. Sharp Corp. led gains on the Nikkei 225 after the Mainichi newspaper reported that the television maker expects to record its first operating profit in five quarters.

The Nikkei 225 climbed 1.4 percent to close at 10,801.57 in Tokyo, rising 1.1 percent on the week. Volume on the gauge was almost 32 percent higher than the 30-day average. The broader Topix Index advanced 1.1 percent to 898.69 after rising as much as 1.5 percent, with about two stocks gaining for each that fell. Shares pared gains after the government announced the stimulus plan.

“The package wasn’t much of a surprise and shows they are making steady progress to make their promises come true,” said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about 5 trillion yen ($56 billion). “Money is flowing into Japanese stocks from overseas as well.”

The Topix advanced 24 percent since Nov. 14 when elections were announced, driving the gauge into a bull market on expectations a new government would call for more stimulus. An advance of 20 percent or more from a low signals a bull market to some investors. Net buying of Japanese shares by foreign investors in 2012 was the highest since 2010, according to Tokyo Stock Exchange. The gauge is trading at 1.07 times book value, compared with 2.21 for the Standard & Poor’s 500 Index and 1.59 for the Stoxx Europe 600 Index.

Stimulus Plan

The stimulus package announced today will include 3.8 trillion yen for disaster prevention and 3.1 trillion yen to stimulate investment. The plan will increase gross domestic product by about 2 percentage points and create about 600,000 jobs, according to the Cabinet Office. Before the announcement, the government reported a bigger-than-expected current account deficit in November.

Futures on the S&P 500 were little changed today. The U.S. equity benchmark yesterday rose 0.8 percent to the highest level in five years with financial shares leading gains.

Exporters gained as the yen fell against 14 of its 16 major peers for a second day, trading near a 2 1/2 year low against the dollar. A weaker currency boosts the value of overseas earnings for Japanese companies.

Canon added 2.3 percent to 3,370 yen. Sony Corp., Japan’s No. 1 exporter of consumer electronics, rose 1.6 percent to 983 yen.

China Inflation

Japanese shares maintained gains even after China’s inflation in December accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices. Rising inflation limits room for easing to bolster growth.

Fast Retailing gained 4.8 percent to 23,640 yen. The clothier saying its net income will probably be 87 billion yen for the year ending August, higher than its previous forecast of 84.5 billion yen, as sales overseas rise.

Sharp jumped 13 percent to 330 yen after the Mainichi newspaper reported it expects to post an operating profit for the first time in five quarters.

The Nikkei Stock Average Volatility Index added 4.2 percent to 20.99, indicating traders expect a swing of about 6 percent on the benchmark gauge over the next 30 days. Japan’s Nikkei 225 January options settled at 10,771.98 today, according to data compiled by Bloomberg.

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