Japan's Stocks Surge Most in Three Months, After Oil Rebounds

By Masaki Kondo and Patrick Rial

July 22 (Bloomberg) -- Japan's stocks rose, sending the Topix index to its sharpest gain in more than three months, amid confidence earnings will weather a global economic slowdown. Shares extended gains in the afternoon after a trading halt on futures was lifted.

Itochu Corp., a trading company with a stake in Russia's Sakhalin oil projects, soared the most in four years, after oil prices rose yesterday for the first time in five days. Honda Motor Co. advanced after Lehman Brothers Holdings Inc. lifted its target on Japan's second-largest automaker.

The Nikkei 225 Stock Average climbed 381.26, or 3 percent, to close at 13,184.96 in Tokyo, the sharpest gain since May 29. The broader Topix index rose 35.31, or 2.8 percent, to 1,287.74, the most since April 2. More than five shares gained for each that fell on the benchmark. Japan's market was closed yesterday for a national holiday.

``Earnings at trading companies should benefit from commodities projects, though a possible slowdown in emerging economies will likely drag down their momentum,'' said Kiyoshi Ishigane, a Tokyo-based senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $61 billion. ``Investors have been waiting for a cue that could allow them to buy back into the market.''

The Nikkei has fallen 14 percent this year amid concern the global economy is slowing, hurting corporate profits. Better- than-estimated results from Citigroup Inc. and Thailand's Kasikornbank Pcl yesterday helped the MSCI Asia-Pacific excluding Japan Index rise the most since March 25.

Topix index futures along with those on Japanese government bonds and all options resumed at 1:45 p.m. today after a system problem caused a halt at 9:21 a.m. today.

``Investors avoided buying stocks in the morning session,'' said Masanori Ikunaga, who helps manage the equivalent of $4.1 billion at Sumitomo Mitsui Asset Management Co. ``They wanted to wait and see how the glitch would affect the market as the system failure narrowed investors trading options.''

Nikkei futures expiring in September added 2.2 percent to 13,220 in Osaka and rose 1.6 percent to 13,215 in Singapore.

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