Japan Stocks Advance as Yen Weakens, Oil Falls; Toyota Gains

By Masaki Kondo

July 24 (Bloomberg) -- Japan's stocks rose a third day after the weaker yen and a drop in oil prices sparked optimism that Japanese companies' overseas sales will weather a global slowdown.

Sony Corp., maker of the PlayStation 3 game machine, surged the most in a month. Toyota Motor Corp. headed for a one-month high after saying demand in emerging markets drove up vehicle sales and as crude oil traded near a seven-week low. Mitsubishi UFJ Financial Group Inc. sent banks to their highest in more than a month after U.S. lawmakers approved a rescue plan for embattled mortgage lenders Fannie Mae and Freddie Mac.

The Nikkei 225 Stock Average climbed 152.32, or 1.1 percent, to 13,456.25 as of 9:59 a.m. The broader Topix index rose 16.28, or 1.3 percent, to 1,319.63. Six stocks advanced for each that fell on the index.

``The weaker yen will likely prompt investors to buy exporters, pushing up the market,'' said Juichi Wako, a strategist at Nomura Holdings Inc., in an interview with Bloomberg Television. ``The approval of the rescue plan will help improve investor sentiment.''

Stocks shrugged off a report that exports fell for the first time in more than four years in June, as a 14 percent drop in crude since their July 3 peak raised expectations global demand for Japanese goods will rebound. Sales to Asia, led by China, cushioned a 1.7 percent drop exports last month as demand from the U.S. and Europe fell, the Finance Ministry said today before markets opened.

Sony, Toyota

Sony, which gets a quarter of its sales from the U.S., added 2.7 percent to 4,500 yen, set for the sharpest jump since June 26. Honda Motor Co., Japan's second-largest carmaker, advanced 2.7 percent to 3,800 yen. Toyota, the world's biggest automaker by market value, jumped 3.7 percent to 5,050 yen, set for the highest since June 27. The company yesterday said preliminary second-quarter sales increased about 2 percent on rising demand in China and other emerging markets.

The yen depreciated to as much as 107.97 in New York from 107.34 at the close of stock trading in Tokyo yesterday. A weaker yen boosts the value of Japanese companies' repatriated overseas sales. A 1 yen change against the dollar alters Sony's annual operating profit by 4 billion yen ($37 million), according to the company.

Crude oil extended its decline, falling 3.1 percent to $124.44 a barrel yesterday, the lowest close since June 4. Oil prices have risen 29 percent this year and hit a record close of $145.29 on July 3.

Mitsubishi UFJ, Japan's largest publicly traded bank, added 2.2 percent to 1,032 yen, and Orix Corp., the nation's largest non-bank financial company, climbed 4.4 percent to 17,440 yen. Brokerage Nomura Holdings Inc. gained 2.5 percent to 1,667 yen.

Rescue Plan

U.S. lawmakers yesterday reached a deal on legislation that authorizes Treasury Secretary Henry Paulson to bail out Fannie Mae and Freddie Mac, the biggest U.S. mortgage lenders. Japan's three biggest lenders, including Mitsubishi UFJ, held a total of 4.7 trillion yen in debt securities issued by U.S. government- backed mortgage financers as of March 31, according to the banks.

SBI Holdings Inc., the owner of the nation's largest online brokerage, leapt 5.9 percent to 23,190 yen, headed for the biggest gain since May 2. The Nikkei newspaper reported today Credit Suisse Group, Lehman Brothers Holdings Inc. and Merrill Lynch & Co. will buy new shares in an SBI unit that runs an equity-trading system allowing individuals to invest outside of regular business hours.

Nikkei futures expiring in September added 0.7 percent to 13,450 in Osaka and gained 0.6 percent to 13,455 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.