Nikkei 225 Closes at Four-Year High on BOJ Speculation

Japanese shares rose, with the Nikkei 225 Stock Average closing at its highest since 2008, amid speculation about who will be the next Bank of Japan governor. Shares pared gains after the yen erased declines.

Toyota Motor Corp. gained 1.7 percent after the Nikkei newspaper said the world’s biggest carmaker may boost domestic output. Orix Corp. gained 2.4 percent after the financial company agreed to buy Rabobank Groep’s asset-management unit. Nippon Paper Group Inc. jumped 8.3 percent after the paper sector was raised to overweight at Mitsubishi UFJ Morgan Stanley Securities Co. Japan Tobacco Inc. lost 1 percent on a Reuters report the government may sell its stake in the cigarette maker.

The Nikkei 225 rose 0.8 percent to 11,468.28 in Tokyo, its highest close since Sept. 29, 2008. The Topix Index gained 1.1 percent to 973.70, with more than four shares rising for each that fell. All but four of the equity gauge’s 33 industry groups advanced.

“Japanese stocks are likely to be at the mercy of news flow about the BOJ personnel change in the near future,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

The Topix surged 35 percent since Nov. 14, when national elections were announced, amid optimism Prime Minister Shinzo Abe and the central bank will lead the country out of deflation. The measure is trading at 1.15 times book value, compared with 2.1 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index.

BOJ Succession

The Yomiuri newspaper reported that Toshiro Muto, a former Bank of Japan deputy governor, may not be on the list of candidates to succeed Masaaki Shirakawa as head of the monetary authority after he steps down on March 19. Muto warned of the dangers of a prolonged relaxed policy when he was a deputy five years ago, though he says his views have changed. The yen fell to as weak as 93.83 against the dollar before gaining to 93.51.

“There are lots of different reports about who it’s going to be, but whoever it is, I think they will toe the line of the government anyway,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about 498 billion yen.

Shares rose even after data showed Japan’s trade deficit swelled to a record 1.63 trillion yen ($17.4 billion) on energy imports and a weaker yen.

Toyota led gains among carmakers, rising 1.7 percent to 4,820 yen. The company will boost domestic production after sales unexpectedly rose, the Nikkei newspaper reported, without citing anyone.

Orix, Paper Sector

Orix advanced 2.4 percent to 10,580 yen,. The company agreed to buy Rabobank’s Robeco Groep NV for 1.94 billion euros ($2.6 billion) in its largest-ever acquisition.

Paper companies jumped the most as a group on the Topix. Nippon Paper Group jumped 8.3 percent to 1,461 yen, the second-biggest gain on the Nikkei 225, while Oji Holdings Corp. advanced 5.6 percent to 339 yen. Japan’s paper sector was raised to overweight by Mitsubishi UFJ Morgan Stanley Securities, citing a price increase to boost profits in the next fiscal year.

Japan Tobacco, the second-biggest drag on the Topix, fell 1 percent to 2,895 yen. Reuters reported the government will begin selling its shares in the company within days. A law passed in 2011 allows the Ministry of Finance, which owns about 50 percent of Japan Tobacco, to sell about a third of its holding to help pay for earthquake reconstruction.

Ebara Corp. tumbled 7.6 percent after the manufacturer of hydraulic pumps announced plans to raise as much as 15.2 billion yen in a share sale.

U.S. Stocks

Futures on the Standard & Poor’s 500 Index were little changed today. The equity benchmark added 0.7 percent to close at the highest level since 2007 in New York yesterday on optimism over mergers and rising investor confidence in Germany. Shares of Google Inc. passed $800 for the first time.

The Nikkei Stock Average Volatility Index slid 1.5 percent to 27.17indicating traders expect a swing of about 7.8percent of the benchmark gauge over the next 30 days. Volume on the measure was about 23 percent lower than its 30-day intraday average.

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