Japan Stocks Rally on Capital Boost Plan, Higher Shipping Fees

By Masaki Kondo

Sept. 19 (Bloomberg) -- Japan stocks surged the most in eight months, cutting by more than half a slump this week, after central banks and regulators announced plans to boost capital and liquidity in crippled financial markets.

Resona Holdings Inc., Japan's fourth-biggest listed bank, surged 18 percent while financial services provider Orix Corp. jumped the most in more than two decades. Mitsui O.S.K. Lines Ltd. led shipping companies to the biggest gain in eight years after cargo fees for commodities climbed. Isuzu Motors Ltd. rose the most in two years after the Nikkei English News said it's in talks to buy General Motors Corp.'s commercial truck business.

``The U.S. financial industry is at the heart of global money flows, and its demise could have brought everything down,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Investors can consider shifting some funds from government bonds back into healthy companies with high dividends.''

The Nikkei 225 Stock Average climbed 431.56, or 3.8 percent, to close at 11,920.86 in Tokyo. The broader Topix index jumped 51.44, or 4.7 percent, to 1,149.12, the steepest gain since Jan. 25. More than two stocks rose for each that slumped.

The Topix fell to a near four-year low yesterday and lost 2.4 percent this week after the failure of Lehman Brothers Holdings Inc. and the U.S. government's rescue of American International Group Inc. shook investor confidence.

Yesterday, U.S. stocks rallied the most in six years on a government plan to buy bad debt and steps by regulators to curb bets against banks and brokerages. The Bank of Japan pumped more money into the financial system this week than it has in at least six years, and it joined with Federal Reserve to offer financial institutions as much as $60 billion to ease a dollar shortage.

Bank Rally

The bankruptcy of Lehman, once the fourth-largest U.S. investment bank, and the takeover of AIG, the biggest U.S. insurer, had prompted financial companies to hoard dollars on concern more failures would follow.

Resona added 18 percent to 134,300 yen, making it the biggest winner on the Nikkei. Mitsubishi UFJ Financial Group Inc., Japan's largest listed bank, gained 12 percent to 862 yen, while Orix, the nation's biggest non-bank financial company, leapt 16 percent to 13,730 yen, the steepest advance since June 1984.

Mitsui O.S.K. climbed 10 percent, the most since April 2001, to 1,091 yen. Kawasaki Kisen Kaisha Ltd., the nation's third- biggest shipping line, jumped 11 percent to 755 yen and market leader Nippon Yusen K.K. rose 9.9 percent to 802 yen. The Topix Marine Transportation Index soared the most since April 2000.

The Baltic Dry Index, a measure of shipping costs for commodities, advanced 2.1 percent yesterday, the most since Aug. 14 and extending its increase to a third day.

`Oversold' Shares

Nippon Steel Corp., the world's second-biggest maker of the alloy, soared 11 percent to 442 yen, the biggest jump in nine years. Smaller rival JFE Holdings Inc. gained 6.9 percent to 3,890 yen. Steelmakers as a group surged the most since July 2003.

``Investors are snapping up shares that have been oversold,'' Hideyuki Ookoshi, who helps oversee the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo, said in an interview with Bloomberg Television.

Nine of the 10 biggest winners among 33 industry groups on the Topix today, including steelmakers, were the biggest losers in the past three months. Steelmakers traded at 8.2 times trailing earnings yesterday, the lowest in three months, according to data compiled by Bloomberg.

Isuzu, the nation's biggest maker of light-duty trucks, rose 11 percent to 336 yen, the biggest gain since November 2006. GM contacted Isuzu to sound out the possible acquisition and the deal is estimated to be worth tens of billions of yen, the Nikkei said, citing unidentified people close to the matter. Isuzu denied the report.

Nikkei futures expiring in December added 4.1 percent to 11,880 in Osaka and gained 3.9 percent to 11,875 in Singapore.

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