Japan's Nikkei Rises, Led by Web, Commodity Shares; Honda Falls

By Masaki Kondo

July 28 (Bloomberg) -- Japan's Nikkei 225 Stock Average rose after Yahoo Japan Corp. said profit grew and commodities producers climbed on an increase in metals prices. Carmakers dropped after Honda Motor Co. cut its full-year earnings target.

Yahoo Japan, operator of the nation's most visited Web site, climbed to a two-week high, while Mitsui & Co. led a gain by trading houses. Honda, the nation's second-largest automaker, posted its biggest drop in a month. Advantest Corp., the world's biggest maker of memory-chip testers, fell the most in more than four months after forecasting a loss.

Internet companies ``are in a relatively safe position,'' said Yoji Takeda, who helps manage the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. ``There's still room for them to boost profit.''

The Nikkei rose 19.02, or 0.1 percent, to close at 13,353.78 in Tokyo, paring a gain of as much as 1 percent. The broader Topix index added 2.51, or 0.2 percent, to 1,300.79. Nineteen of 33 industry groups on the Topix gained. The total value of shares traded on the main board of the exchange was the lowest all year.

Yahoo Japan said net income rose 18 percent in the three months to June 30, the fastest quarterly gain since June 2007, on increased revenue from online advertising. Analysts at Deutsche Bank AG and KBC Securities raised their ratings on the company. The shares jumped 4.3 percent to 41,700 yen, the highest since July 10 and making it the fifth-biggest winner on the Nikkei.

NTT DoCoMo Inc., the nation's most profitable wireless carrier, rose 2.3 percent to 165,500 yen, while its parent Nippon Telegraph & Telephone Corp. jumped 3.1 percent to 528,000 yen.

DoCoMo Profit

DoCoMo may report more than 250 billion yen ($2.32 billion) in operating profit for the three months to June 30, compared with 203.8 billion yen a year earlier, the Nikkei newspaper reported on July 26. An installment payment plan for handsets helped DoCoMo cut phone subsidies, the newspaper said.

``It would be no surprise if DoCoMo reports a near 30 percent gain in first-quarter operating profit,'' Daisaku Masuno, an analyst at Nomura Securities Co., wrote in a Japanese-language report today. He has a ``neutral'' rating on DoCoMo and a ``strong buy'' on NTT.

Mitsui, which gets more than half its profit from commodities, surged 5.7 percent to 2,230 yen, making it the biggest winner on the Nikkei. Larger rival Mitsubishi Corp. added 2.6 percent to 3,140 yen.

Metals Gain

A measure of six metals traded on the London Metal Exchange, including copper and zinc, added 0.3 percent on July 25, the first gain in three days. Copper rose 0.8 percent, while gold climbed 0.5 percent. Resource prices were given a boost after U.S. durable goods orders unexpectedly rose 0.8 percent in June from the previous month.

``Trading houses are in one of the few industries that is set to announce some strong first-quarter earnings, and investors are buying into that,'' said Mitsushige Akino, who oversees the equivalent of $560 million in Japanese equities at Ichiyoshi Investment Management Co. in Tokyo.

Telecommunication companies and trading houses contributed the most to the Topix's climb.

Honda lost 2.9 percent to 3,650 yen, the sharpest drop since June 19. The company cut its full-year target for operating profit by 3.1 percent because of higher material costs and lower vehicle sales. Hino Motors Ltd., Japan's largest maker of heavy- duty trucks, dropped 4.1 percent to 633 yen after Mizuho Investors reduced its recommendation from ``neutral plus.''

Production Cut

NGK Insulators Ltd. plunged 7.1 percent to 1,749 yen, making it the biggest loser on the Nikkei. A report in the Nikkei newspaper said the company will cut production of emission filters for diesel engines by as much as 50 percent as North American sales of large vehicles fall. A gauge tracking auto- related stocks was the biggest drag on the Topix.

Advantest sank 6.1 percent to 2,170 yen, the sharpest decline since March 3. Tokyo Electron Ltd., the world's second- largest maker of chip gear, dropped 4.8 percent to 5,850 yen.

Advantest's first-half loss will probably be 2.5 billion yen compared with a 16.9 billion yen profit for the same period a year ago as orders plunge 62 percent, it said on July 25.

Nikkei futures expiring in September dipped 0.1 percent to 13,350 in Osaka and rose 0.2 percent to 13,360 in Singapore.

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