Japan Shares Rebound After Posting Biggest Drop in Month

Japanese shares rose, after the Topix index yesterday fell the most in a month, as seafood companies and utilities climbed.

The Topix Fishery, Agriculture & Forestry Index advanced 1.2 percent. Konica Minolta Inc. gained the most on the Nikkei 225 Stock Average after JPMorgan Chase & Co. raised its rating on the camera maker. Euglena Co., which creates oil from seaweed, surged 27 percent after scheduling an announcement on a joint project with Isuzu Motors Ltd. Companies that would generate revenue from casinos advanced after a lawmaker said the Diet plans to debate a legalization bill tomorrow.

The Topix added 0.3 percent to 1,238.20 at the close of trading in Tokyo, with almost three shares rising for each that fell. Volume was about 16 percent below the 30-day average. The measure slid 0.8 percent yesterday, the most since May 19. The Nikkei 225 increased 0.3 percent today to 14,975.97. The yen slid 0.1 percent to 101.91 per dollar after rising 0.2 percent yesterday amid escalating tensions in Iraq.

“Valuations don’t look strikingly high and if anything, stocks are actually undervalued,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. “However, there’s a possibility of turbulence ahead depending on the situation in Iraq, so investors have a strong desire to wait and see.”

The Topix traded at 1.2 times book value today, compared with 2.7 for the Standard & Poor’s 500 Index and 1.9 for the Stoxx Europe 600 Index yesterday.

Futures on the S&P 500 added 0.1 percent. The gauge climbed 0.1 percent yesterday as corporate deals and growth in American manufacturing overshadowed tension in Iraq.

U.S. Manufacturing

Data showed U.S. industrial production expanded more than forecast in May, a sign gains in manufacturing are supporting growth as the U.S. economy picks up. The New York Fed’s Empire manufacturing report rose to 19.28, exceeding the average estimate of 15 in a Bloomberg survey of economists, a separate report indicated.

In Iraq, Kurdish troops are defending the fourth-largest oilfield against Islamist militants. The U.S. is considering sending special forces, according to an Associated Press report citing unidentified officials. West Texas Intermediate slipped 0.3 percent today after jumping 4.1 percent last week.

Iraq Concerns

“Oil prices are rising because of the tension in Iraq,” said SMBC Friend’s Matsuno. “Japan, in particular, imports a lot of crude oil, and import prices have gone up with the depreciation of the yen. It’s going to be harsh if this becomes a reason for the economy to buckle.”

A Topix gauge tracking seafood makers and seed producers rose the most among the 33 industry groups today, erasing yesterday’s 0.6 percent decline. Utilities and chemical producers climbed 0.9 percent.

Shizuoka Bank Ltd. jumped 3.4 percent to 1,059 yen after the regional lender said it will spend as much as 12 billion yen ($118 million) to buy back shares.

Euglena surged 27 percent to 1,427. The company will make an announcement about a joint project with Isuzu on June 25, Euglena said yesterday.

Konica Minolta surged 6.2 percent to 930 yen. JPMorgan raised its rating on the stock to overweight from neutral, citing strong earnings.

Japan’s parliament will begin debating a bill to legalize casinos tomorrow, Masahiko Shibayama, chairman of the lower house cabinet committee, said today. Game-maker Konami Corp. gained 2.1 percent to 2,300 yen. Oizumi Corp., which makes equipment for pachinko parlors, surged 8 percent to 1,049 yen.

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