Japanese Stocks Climb as Inflation, Financial Concerns Ease

By Patrick Rial and Masaki Kondo

Aug. 25 (Bloomberg) -- Japanese shares advanced for the first time in five days after crude oil dropped the most since December 2004, relieving inflationary pressure, and speculation mounted Lehman Brothers Holdings Inc. will be bought out.

Bridgestone Corp., the world's largest tiremaker by sales, surged 3.7 percent after oil fell more than $6 a barrel and Federal Reserve Chairman Ben S. Bernanke said inflation should slow. Sumitomo Trust and Banking Co., Japan's fifth-largest publicly traded bank, jumped 3.9 percent after a report Korea Development Bank might acquire Lehman.

The Nikkei 225 Stock Average rose 241.99, or 1.9 percent, to 12,908.03 as of 9:29 a.m. in Tokyo. The broader Topix index advanced 25.35, or 2.1 percent, to 1,241.77. All but two of 33 industry groups on the Topix rose.

``This week the market will get a strong start due to the slump in oil prices,'' Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center in Tokyo, said in an interview with Bloomberg Television.

The stronger dollar and the reopening of a pipeline through Georgia helped send crude oil for October delivery 5.4 percent lower to $114.59 in New York on Aug. 22. As of 9:11 a.m. Japan time, the contract dipped $0.02 to $114.57 a barrel in New York.

A recovery in the dollar and declines in commodity prices ``should lead inflation to moderate,'' Bernanke said on Aug. 22.

Lehman rallied 5 percent on Aug. 22 after Reuters reported KDB is considering a purchase of the investment bank. Lehman's shares had earlier slumped on a report talks to sell a 50 percent stake had collapsed.

Bridgestone gained 1,793 yen, headed for the biggest advance since Aug. 11, while its closest rival Yokohama Rubber Co. added 3.1 percent to 564 yen. Makers of rubber products posted the steepest jump among the Topix industry groups.

Banks Advance

Sumitomo Trust and Banking soared to 662 yen, set for the largest gain since July 7. Mizuho Financial Group Inc., Japan's second-biggest publicly traded bank, climbed 3.2 percent to 455,000 yen and market leader Mitsubishi UFJ Financial Group Inc. rose 3.2 percent to 818 yen.

Steelmakers climbed after the Nikkei newspaper said they plan to spend 1 trillion yen ($9.1 billion) to jointly acquire iron ore mining companies to ensure a stable supply of the raw material for steel. Nippon Steel Corp., the world's No. 2 maker of the alloy, climbed 1.8 percent to 515 yen. JFE Holdings Inc., Japan's second largest, gained 2.5 percent to 4,540 yen.

Daikin Industries Ltd., the biggest Japanese maker of air conditioners, jumped 2.9 percent to 3,880 yen after the Nikkei said air conditioner sales climbed 20 percent since June from the previous year, driven by hotter weather.

Nikkei futures expiring in September gained 1.9 percent to 12,910 in Osaka and climbed 1.7 percent to 12,910 in Singapore.

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