Japan Stocks Rise as Machine Orders Climb, Crude Prices Retreat

By Makiko Kitamura and Masaki Kondo

July 9 (Bloomberg) -- Japanese stocks advanced after machine orders surged almost 10 times faster than economists had expected and crude prices fell the most in three months, easing concern rising energy costs will reduce demand for equipment.

Fanuc Ltd., Japan's largest maker of industrial robots, rose for the first time in 12 days. Bridgestone Corp., the world's biggest tiremaker, climbed to the highest in two weeks on speculation falling crude prices will reduce manufacturing costs. Sony Corp., the world's second-biggest maker of electronics, reversed early gains after a missile test by Iran caused the yen to surge against the dollar.

``The report on machine orders shows corporate capital spending is robust, which is positive for the stock market,'' said Naoki Fujiwara, who oversees the equivalent of $720 million as chief fund manager at Tokyo-based Shinkin Asset Management Co. ``The decline in oil gives investors room to breathe.''

The Nikkei 225 Stock Average climbed 19.03, or 0.2 percent, to close at 13,052.13 in Tokyo, after rising as much as 1.9 percent. The broader Topix index added 2.02, or 0.2 percent, to 1,285.53, after gaining 2 percent. About the same number of shares rose and fell on the Topix.

Equipment orders, which signal capital spending in the next three to six months, rose 10.4 percent in May from April, the Cabinet Office said today before the stock market opened, while economists had estimated a 1.1 percent increase. Orders from the steel industry more than doubled and those for electrical machinery climbed by a third, according to the report.

Iran test-fired its long-range Shahab 3 missile capable of reaching Israel as part of war games today, Iran's Arabic state television Al-Alam reported. The test is part of war games by the Revolutionary Guards Corps in the Persian Gulf, it said.

The yen strengthened on speculation the missile test signals that international political tensions will escalate. The Japanese currency rose to as much as 107.05 versus the dollar from a low of 107.51. A stronger yen reduces the value of repatriated sales.

To contact the reporters for this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.