Japan's Nikkei Futures Rise After Oil Falls, Dollar Strengthens

By Patrick Rial

Aug. 12 (Bloomberg) -- Japan's Nikkei 225 Stock Averagefutures climbed in Chicago as oil prices retreated to the lowest since May and the dollar strengthened against the yen.

Oil fell for a second day to close below $115 per barrel for the first time since May 1, boosting the outlook for companies such as Toyota Motor Corp. that rely on consumer spending. Komatsu Ltd., the world's second-biggest maker of earthmovers, posted the biggest gain among Japan's actively traded American receipts as the dollar rose to the highest since January versus the yen, improving the profitability of overseas sales.

``Things are looking good for the market as there's been no change in the trend of oil weakness and dollar strength,'' said Mamoru Shimode, Tokyo-based chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. ``On the other hand, there aren't many people trading at this point, which could put a cap on gains in the indexes.''

Nikkei 225 futures expiring in September closed in Chicago yesterday at 13,425, up from 13,390 earlier in Osaka and 13,365 in Singapore. The Bank of New York Japan ADR Index, which tracks the nation's American depositary receipts, advanced 1.1 percent.

Yesterday, the Nikkei rose 2 percent to 13,430.91, the highest in more than two weeks, and the Topix index gained 1.6 percent to 1,280.00.

Crude has fallen 21 percent from a record on July 14 to its close of $114.45 in New York yesterday. Lower fuel prices reduce production and shipping costs for manufacturers and increase discretionary income for consumers as gasoline bills drop.

Nippon Sheet

The yen recently traded at 110.06 versus the dollar, after earlier falling to as low as 110.40 in New York, a level not seen since Jan. 2. Japan's currency strengthened to as much as 95.76 this year, prompting companies such as Toyota, which generates more than half its sales overseas, to predict a drop in earnings.

Toyota's receipts added 1.1 percent from yesterday's close in Tokyo, while Komatsu increased 1.6 percent.

Nippon Sheet Glass Co., Asia's second-largest glassmaker, reported a 17 percent slide in operating profit yesterday as energy costs increased, sales dropped in North America and Japan.

The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group, said in a note to clients, as building and automotive products divisions stayed profitable due to restructuring efforts.

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