Japan Stocks Advance on Fed Rescue of AIG; Tokio Marine Gains

By Masaki Kondo and Kotaro Tsunetomi

Sept. 17 (Bloomberg) -- Japanese stocks advanced, rebounding from a three-year low, on expectations a rescue of the biggest U.S. insurance company will calm turmoil in financial markets.

Tokio Marine Holdings Inc., Japan's biggest insurance group, climbed 5.6 percent after the Federal Reserve said it will extend a loan to American International Group Inc. Resona Holdings Inc., Japan's fourth-largest listed bank, leapt 6.5 percent. Kawasaki Kisen Kaisha Ltd. led shipping companies higher after transport fees for commodities ended a 19-session drop.

``Expectations of an AIG rescue will likely spur people to buy back into the market,'' said Masayoshi Yano, a senior market analyst at Tokyo-based Meiwa Securities Co. ``Investors are keeping a sharp eye on all AIG developments.''

The Nikkei 225 Stock Average climbed 184.41, or 1.6 percent, to 11,794.13 as of 10:14 a.m. in Tokyo. The broader Topix index rose 11.87, or 1.1 percent, to 1,129.44. All but three of 33 industry groups on the Topix advanced.

The Federal Reserve Board, with support of the U.S. Treasury, invoked emergency powers to lend up to $85 billion to AIG to save the firm from collapse. Yesterday, the Nikkei sank 5 percent to the lowest since July 2005 in Tokyo after U.S. brokerage Lehman Brothers Holdings Inc. filed for bankruptcy and on concern AIG will suffer a similar fate.

Tokio Marine surged 5.6 percent to 3,410 yen, helping insurers rebound from their biggest decline since October 1987 yesterday. Resona surged 6.5 percent to 111,100 yen, while market leader Mitsubishi UFJ Financial Group Inc. jumped 4.4 percent to 827 yen.

Shipping Fees

Kawasaki Kisen, the nation's third-largest shipping line, soared 6 percent to 695 yen, set for the biggest gain since April 18. Mitsui O.S.K. Lines Ltd., the second largest, jumped 2.4 percent to 1,011 yen, while bigger rival Nippon Yusen K.K. added 2.3 percent to 771 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, rose 0.3 percent yesterday, the first gain since Aug. 18, as demand increased for shipments of iron ore used in steel.

Toshiba Corp., Japan's biggest semiconductor manufacturer, gained 3.5 percent to 498 yen. Samsung Electronics Co., the world's second-largest chipmaker, made a $5.85 billion hostile bid for SanDisk Corp. to widen its lead in the market for semiconductors that store pictures and music. SanDisk rejected Samsung's bid. The move will probably prompt Toshiba to wage a bidding war, said Vijay Rakesh, a San Francisco-based analyst at ThinkPanmure LLC.

Yesterday, Toshiba denied a Reuters report it was interested in making a bid for SanDisk.

Share Buyback

Canon Inc. leapt 5.5 percent to 4,050 yen, headed for the steepest advance since April 21. The company will spend as much as 50 billion yen ($470 million) to buy back up to 14.5 million shares, the company said yesterday after markets shut. Canon, whose shares have fallen by a quarter this year, will probably report its first drop in annual net income this year, the Nikkei newspaper reported on Sept. 13.

Nikkei futures expiring in December added 1.9 percent to 11,800 in Osaka and gained 1.6 percent to 11,790 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo atmkondo3@bloomberg.net; Kotaro Tsunetomi in Tokyo atktsunetomi@bloomberg.net.