Japanese Stocks Climb on Matsushita Profit Gain, Oil Retreat

By Patrick Rial

July 30 (Bloomberg) -- Japanese stocks climbed after Matsushita Electric Industrial Co. beat its profit forecast and as oil dropped to a 12-week low, lifting confidence that declining materials costs will boost margins.

Matsushita, the maker of Panasonic-brand products, soared the most in three months after first-quarter earnings surged on television sales. Nidec Corp., the world's biggest maker of motors for computer hard-disk drives, posted its biggest gain in nine months as profit rose by more than a third. Bridgestone Corp., the world's largest tiremaker by sales, advanced as a drop in oil cuts its manufacturing costs.

``I'm bullish on equities,'' said Masayuki Kubota, a senior fund manager at Daiwa SB Investments Ltd. in Tokyo, who oversees $1.7 billion. ``The two problems overhanging the market have been hyperinflation caused by oil prices and U.S. mortgages, but now at least the first concern has started to fade.''

The Nikkei 225 Stock Average advanced 178.77, or 1.4 percent, to 13,338.22 as of 10:23 a.m. in Tokyo. The broader Topix index added 16.52, or 1.3 percent, to 1,298.16. About six shares gained for each that fell on the benchmark.

Matsushita surged 6.7 percent to 2,325 yen, the most since April 30. The company said yesterday net income rose 86 percent to 73 billion yen ($679 million) in the three months ended June 30, beating the median estimate of analysts.

`Outstanding' Earnings

Nomura Holdings Inc. analyst Eiichi Katayama raised his rating on the shares to ``buy'' from ``neutral,'' calling the profit figures ``outstanding.'' HSBC Securities Asia Ltd. also boosted Matsushita's rating.

Nidec rallied 8.4 percent to 7,660 yen, the sharpest jump since October, after posting a 36 percent gain in first-quarter profit as sales rose. Taisho Pharmaceutical Co., which developed the antibiotic clarithromycin, surged 9.1 percent to 2,270 yen, the biggest gain since March 2001, after sales of its hair-growth treatment helped boost profit 28 percent for the quarter.

``Nidec's strong results stand out from the large profit declines announced by other electronics components makers,'' Hisanori Shimoi, an analyst at Nikko Citigroup Ltd., wrote in a note to clients. ``We are impressed by the strong overall performance of Nidec's subsidiaries.''

Bridgestone, which uses petroleum-based synthetic rubber for tires, advanced 2.7 percent to 1,801 yen. Mitsui Chemicals Inc., Japan's second-biggest ethylene producer, gained 2.4 percent to 519 yen.

Crude oil for September delivery fell 2 percent to $122.19 a barrel in New York, the lowest close since May 6. The drop was spurred by the strengthening dollar as well as a MasterCard Inc. report showing gasoline demand in the U.S. fell for a 14th- consecutive week.

Meanwhile, Sony Corp., the maker of the PlayStation 3 game console, lost 3.6 percent to 4,060 yen after lowering its net income forecast by 17 percent, citing a weaker earnings outlook for its handset, television and camera divisions.

Itochu Techno-Solutions Corp. was bid lower by its daily limit of 500 yen to 3,520 yen. The computer-network developer said first-quarter net income plunged 78 percent, prompting at least two brokerages to downgrade the stock.

Elsewhere, Japan's industrial production fell 2 percent in June from the previous month, more than economists had forecast.

Nikkei futures expiring in September added 1.7 percent to 13,350 in Osaka and Singapore.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.