Japan Stocks Gain as Oil Drops, Yen Weakens; Bridgestone Rises

By Masaki Kondo

Aug. 11 (Bloomberg) -- Japan's stocks rose, sending the benchmark index to the highest in more than two weeks, after crude oil traded near a 14-week low and a drop in the yen boosted the earnings outlook for manufacturers.

Bridgestone Corp., the world's largest tiremaker, led rubber makers to their highest in eight weeks, even after the company cut its full-year earnings target. Honda Motor Co., which gets more than half its sales from North America, was set for the highest in two weeks, as the yen traded near a seven-month low. Auto-parts maker Denso Corp. surged the most in three weeks.

The Nikkei 225 Stock Average climbed 220.27, or 1.7 percent, to 13,388.68 as of 10:19 a.m. in Tokyo, the highest since July 24. The broader Topix index rose 16.67, or 1.3 percent, to 1,276.60. More than two stocks gained for each that fell on the Topix.

``The decline in oil and depreciation of the yen will give investors enough room to appreciate those companies that have cut costs and passed on prices,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.

Crude fell to as low as $114.62 a barrel on Aug. 8, the lowest since May 2, as a drop in the dollar reduced the appeal of commodities as an inflation hedge. The contract recently traded at $115.93. The yen weakened to as much as 110.39 against the U.S. currency from 109.63 at the close of stock trading in Tokyo on Aug. 8, the weakest since Jan. 2. A weaker yen boosts the value of repatriated sales.

Autos, Tires

Bridgestone climbed 3.1 percent to 1,876 yen, while smaller rival Toyo Tire & Rubber Co. added 5.5 percent to 308 yen. Sumitomo Rubber Industries Ltd. leapt 11 percent to 960 yen, set for the sharpest jump since April 2000.

About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association. Last week, Bridgestone slashed its annual net-income target by 27 percent owing to rising material costs and weaker U.S. sales.

Honda rose 3.5 percent to 3,590 yen, set for the highest close since July 28. Fuji Heavy Industries Ltd., maker of Subaru cars, jumped 4.6 percent to 609 yen, while Denso, part owned by Toyota Motor Corp., climbed 4.1 percent to 2,955 yen, headed for the biggest gain since July 22.

Makers of rubber products were set for the highest close since June 19 and were the biggest winners among 33 industry groups on the Topix.

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