By Patrick Rial
Sept. 22 (Bloomberg) -- Japanese stocks surged, sending the Topix index to its biggest two-day gain since January, after U.S. Treasury Secretary Henry Paulson proposed a $700 billion plan to buy mortgage securities in a bailout of the financial system.
Sumitomo Mitsui Financial Group Inc., Japan's third-largest listed bank, was bid higher by 3 percent. Toyota Motor Corp., the world's largest carmaker by value, was poised to rise 2.1 percent. Paulson's plan would allow the government to buy a variety of mortgage-related securities to relieve a freeze in credit markets, which has pushed financial institutions to the brink.
``The speed and degree to which the U.S. government has intervened to buy nonperforming assets is positive for the market,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co. said in an interview with Bloomberg Television. ``Value stocks that have been brought down to very cheap levels are going to get a second look today.''
The Nikkei 225 Stock Average gained 214.48, or 1.8 percent, to 12,135.34 as of 9:09 a.m. in Tokyo. The broader Topix index climbed 22.90, or 2 percent, to 1,172.02. The benchmark has advanced 6.8 percent in the past two days, the biggest back-to- back rally since Jan. 25.
The credit crisis, sparked by the collapse of the U.S. home- loan market, has seen Lehman Brothers Holdings Inc. file for bankruptcy, and government takeovers of American International Group Inc. and mortgage giants Fannie Mae and Freddie Mac. The turmoil wiped off as much as $20 trillion in global equity values from a peak in October.
Nikkei futures expiring in December added 2.9 percent to 12,220 in Osaka and jumped 2.9 percent to 12,210 in Singapore. Standard & Poor's 500 Index futures lost 0.7 percent to 1,237.80.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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