Most Japanese Stocks Rise, Led by Banks, Before Lehman Report

By Patrick Rial and Kotaro Tsunetomi

Sept. 10 (Bloomberg) -- Most Japan stocks rose, led by banks, on speculation a stake sale by Lehman Brothers Holdings Inc. will quell uncertainty in financial markets. Commodity shares fell on concern slower economic growth will curb raw materials demand.

Resona Holdings Inc., Japan's fourth-largest listed bank by value, erased early losses to climb 6 percent after South Korea's Yonhap news agency said Korea Development Bank seeks to buy a stake in Lehman. KDB said after the market closed it ended talks with the U.S. brokerage. Sumitomo Metal Mining Co., Japan's biggest nickel maker, slumped to the lowest in almost three years after metals prices retreated.

The Topix index gained 0.79, or 0.1 percent, to 1,192.38 at the close of trading in Tokyo. About nine shares rose for every seven that declined on the gauge. The Nikkei 225 Stock Average fell 54.02, or 0.4 percent, to 12,346.63.

``The feeling has been that the story of Lehman is headed for a resolution, so investors have been anticipating some kind of news to break,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo. ``It suddenly became the smarter strategy to be a buyer in this kind of cautious market with the report that KDB will make a move.''

Both gauges earlier sank as much as 1.9 percent on concern Lehman would not be able to acquire additional capital, extending credit-market turmoil.

Yonhap Report

Resona rose 6 percent to 118,400 yen. Mitsubishi UFJ Financial Group Inc., the country's biggest lender by market value, advanced 3.2 percent to 867 yen. Nomura, Japan's largest brokerage, climbed 3.2 percent to 1,531 yen.

KDB is seeking to spend about $6 billion to acquire a more than 25 percent stake in Lehman, Yonhap said today. Following the report, KDB said in an e-mailed statement it has ``ended the negotiations as there's differences over the terms of the deal and considering financial market conditions at home and overseas.''

Lehman, the fourth-largest U.S. securities firm, said yesterday will announce third-quarter results a week ahead of schedule along with ``key strategic initiatives.''

Sumitomo Metal retreated 3.8 percent to 1,103 yen, a level not seen since November 2005. Inpex Holdings Inc., the country's largest oil explorer, declined 2.7 percent to 988,000 yen. Mitsubishi Corp., Japan's largest trading company, lost 2.7 percent to 2,520 yen.

Metals, Oil

A measure of six metals traded on the London Metal Exchange, including copper and zinc, dropped 2 percent yesterday. Brent oil in London declined as much as 4.3 percent to $99.04, the first drop below $100 since April. Crude rebounded in New York today after the OPEC president called on members to stop overproducing.

A slowing global economy is reducing global demand for materials. The European Union will cut its economic-growth forecast this week as confidence wanes and inflation expectations increase, EU Commissioner Joaquin Almunia said yesterday.

Takeuchi Manufacturing Co., a mini-shovel maker that exports more than 90 percent of its production, plunged 8.5 percent to 1,420 yen, the lowest since July 2003. Nippon Steel Corp., the world's No. 2 maker of the alloy, lost 4.2 percent to 454 yen. Asahi Glass Co., which gets a quarter of its sales in Europe, declined 2.7 percent to 1,019 yen.

``It's hard to tell at the moment just how deep the global economic downturn is going to get,'' said Hideo Arimura, who oversees about $1.9 billion at Mizuho Asset Management Co. in Tokyo. ``Europe is in the most precarious position, and its weakness is going to be a drag for other economies.''

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net.