Japan Stocks Rebound as China Slows Pace of Currency Weakening

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Japanese stocks rebounded from the steepest loss in a month after the People’s Bank of China weakened the yuan by the least in three days and said it will control the pace of the currency’s depreciation.

Companies that rely on China for sales reversed two days of losses, with machinery maker Komatsu Ltd. climbing 1.1 percent. Utilities led gains in the Topix index, while banks fell. Hirose Electric Co. advanced 1.9 percent after a broker upgraded its rating on shares of the electronic-parts maker. SoftBank Group Corp. slumped 2.6 percent after one of its biggest investments, Alibaba Group Holdings Ltd., tumbled in U.S. trading as a weaker Chinese economy weighed on earnings.

The Topix added 0.1 percent to 1,667.95 at the close in Tokyo, reversing losses of as much as 0.9 percent after China’s central bank said adjustment spurred by how it determines the daily yuan reference rate is “basically already completed.” The Nikkei 225 Stock Average rose 1 percent to 20,595.55. Both measures slumped yesterday to the lowest closing levels since July 8. The yen strengthened for a third day against the yuan in offshore trading, bringing its gains since Tuesday to 3.3 percent.

“Devaluation of 4 to 5 percent won’t have any real effects on Japanese corporations,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. “Actual impacts on the Japanese economy and corporations are limited.”

Yuan Support

The PBOC’s Assistant Governor Zhang Xiaohui fueled gains in regional stocks including Japan after he said in Beijing that there is no basis for the yuan’s depreciation to persist and that the central bank will step in when the market is “distorted.” The currency stemmed its worst loss in two decades.

Komatsu, which competes in China in the market for construction equipment, rebounded 1.1 percent after yesterday suffering the steepest loss in a month. Department-store operator Isetan Mitsukoshi Holdings Ltd., which relies on spending from Chinese tourists, rose 2.8 percent after losing 5 pecent yesterday.

Utilities rose the most among the Topix’s 33 industry group, with Tokyo Electric Power Co. surging 4.7 percent, while Kyushu Electric Power Co. added 3.1 percent. Utilities fell earlier this week after the restart of the nation’s first nuclear reactor since the Fukushima meltdown 4 years ago.

Hirose Electric gained 1.9 percent after JPMorgan Chase & Co. raised its rating on the supplier to Apple Inc. to neutral from underweight.

SoftBank Slides

Alibaba’s poor earnings results weighed on Softbank’s shares, which tumbled 2.6 percent. The Tokyo-based mobile carrier owns a stake in the Chinese online retailer worth about $60 billion as of the end of July.

Futures on the Standard & Poor’s 500 Index rose 0.3 percent after the underlying measure erased a 1.5 percent decline to close 0.1 percent higher on Wednesday in New York. Commodity-related stocks led gains after a rebound in prices for some raw materials.

Japanese machine orders rose 16.6 percent from a year earlier in June, less than the 17.6 percent gain estimated by economists, a government report showed Thursday.