Japanese Shares Rise on Weaker Yen, Global Recovery Signs

Japanese shares rose, with the Topix index climbing the most in a month, as the yen fell to a one-month low to the dollar amid signs of global economic recovery.

Toyota Motor Corp., Asia’s biggest carmaker, advanced 3.3 percent. Kansai Electric Power Co. jumped the most on the Nikkei 225 Stock Average after a panel of experts said an earthquake fault under the utility’s Ohi nuclear plant may not be active. Pigeon Corp. surged 7.9 percent after the baby-goods maker boosted its profit forecast by 16 percent. Nomura Holdings Inc. climbed 4.9 percent as brokerages gained the most among the 33 Topix subsectors after losing 6.9 percent last month.

The Topix increased 2.8 percent to 1,149.18 at the close in Tokyo, its biggest gain since Aug. 2, as all its groups rose. The measure lost 2.3 percent last month to cap the longest monthly losing streak since 2008. The Nikkei 225 added 3 percent to 13,978.44, with just one company falling. Japan’s currency slid to 99.55 against the greenback, its lowest since Aug. 2.

“Investors’ risk aversion has started to recede,” said Hideyuki Ishiguro, senior strategist at Okasan Securities Co. in Tokyo. “Exporters generally estimate the currency at 93.5 yen to the dollar, so the yen’s level now raises optimism that we’ll see upwards earnings revisions in the next reporting season.”

Gauges from the U.K. to Spain signaled a pick-up in European output. Manufacturing in China climbed to a 16-month high in August, while a gauge of non-manufacturing industries released today fell to 53.9 from 54.1 in July, remaining above the 50 level that indicates expansion. The Institute for Supply Management is expected to say U.S. factory activity expanded for a third month.

Yen Weakens

The yen slipped 0.2 percent to 99.55 per dollar today, after retreating 1.2 percent yesterday, as economic data damped demand for haven assets.

Toyota gained 3.3 percent to 6,200 yen, while Honda Motor Co., which gets more than 80 percent of revenue abroad, increased 2.4 percent to 3,655 yen. Panasonic Corp., which generates almost half its sales outside Japan, jumped 3.7 percent to 918 yen.

“Investors are now seeing global risk as controllable and relief is spreading,” said Akio Yoshino, Tokyo-based chief economist at Amundi Japan Ltd., which oversees 3.3 trillion yen ($33 billion) in assets. “After Japanese stocks fell in August, we’re also seeing some technical rebound. The yen may weaken to 105 per dollar by year-end if we see further growth strategies from Abenomics.”

Mitsubishi Motors Corp. was the second-biggest gainer on the Nikkei 225 today. The automaker jumped 7.7 percent to 1,077 yen as the currency weakened and after the 14-day relative strength index on the stock yesterday fell to 25. A reading below 30 indicates to some traders that the shares have fallen too far.

Utilities Gain

Kansai Electric rose 8.1 percent to 1,217 yen, the most since May 29. A Nuclear Regulation Authority panel of seismologists and geologists said an earthquake fault-line under the Osaka-based utility’s Ohi nuclear plant is not active, while noting that the ruling was not final.

Tokyo Electric Power Co., also known as Tepco, gained 3.4 percent to 525 yen after Prime Minister Shinzo Abe said his government will provide whatever funds are necessary to contain the Fukushima nuclear disaster. Japan may spend 47 billion yen on controlling radiation leaks at the wrecked plant, including constructing an underground frozen wall to block the movement of groundwater, Trade and Industry Minister Toshimitsu Motegi told reporters today.

Pigeon jumped 7.9 percent to 4,905 yen, the most since March 6, after earlier surging to its highest level on record. The company raised its full-year net income forecast by 16 percent to 5.6 billion yen.

Banks, Brokerages

Financial stocks advanced today. A Topix measure of brokerages added 4.8 percent, the most since June 10. The Topix Banks Index, which makes up 10 percent of the broader gauge, rebounded 3.6 percent after dropping 3.3 percent in August.

Nomura, Japan’s biggest securities company, added 4.9 percent to 729 yen. Online brokerage Monex Group Inc. jumped 6.6 percent to 38,850 yen, the most in eight weeks. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender, advanced 5 percent to 607 yen.

“Brokers and banks are rebounding after being oversold,” said Junichi Misawa, head of equity investment at Sumitomo Mitsui Trust Asset Management Co. in Tokyo. “When the market just kept falling, these sectors were sold off a lot.”

The Topix traded at 1.20 times book value today, compared with 2.40 for the S&P 500 on Aug. 30 and 1.71 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 28.38 today, compared with its five-year median of 19.42.

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