Japan Stocks Gain a 3rd Day on Stimulus Plan Hopes, Oil Rebound

By Masaki Kondo

Oct. 21 (Bloomberg) -- Japan stocks climbed a third day on speculation stimulus plans will jump-start economic growth in the U.S. and at home, and as a rise in oil boosted resource shares.

Honda Motor Co., Japan's second-biggest carmaker, climbed 6.8 percent. Oil explorer Inpex Corp., which has lost more than half of its value in the past five months, added 9.6 percent. Mitsubishi Estate Co., Japan's second-biggest developer, jumped 9.2 percent to a three-week high after a lending rate between banks fell the most in nine months, easing funding concerns.

``Investors are taking notice of the determination by governments to bolster economies,'' said Masaru Hamasaki, who helps manage about $3.3 billion as senior strategist at Toyota Asset Management Co. ``A decline in oil stocks made them sufficiently cheap, and it's not a bad strategy to buy them as long as you discount the volatility of commodities markets.''

The Nikkei 225 Stock Average jumped 300.66, or 3.3 percent, to close at 9,306.25 in Tokyo, bringing its three-day gain to 10 percent. The broader Topix index rose 29.27, or 3.2 percent, to 956.64, with more than three stocks rising for each that slumped.

Federal Reserve Chairman Ben S. Bernanke yesterday said U.S. lawmakers should consider new measures to improve access to credit for consumers and businesses. Meanwhile, tax cuts in a proposed economic stimulus package in Japan may reach 2 trillion yen ($19.7 billion), the Mainichi newspaper said today.

Today's rise extends the Nikkei's 5 percent gain last week, which followed its record 24 percent plunge in the five days ending Oct. 10. The gauge has slumped more than a third this year as the collapse of the U.S. mortgage market toppled financial companies and slowed global economic growth.

Oil Rebound

Honda, which derives about half its profit from North America, added 6.8 percent to 2,435 yen, while Toyota Motor Corp. gained 5 percent to 3,790 yen. Canon Inc., which gets a third of its sales from the Americas, rose 5.5 percent to 3,460 yen.

Inpex, the nation's biggest oil and gas explorer, advanced 9.6 percent to 683,000 yen after having fallen 56 percent from a record 1.4 million yen on May 19. Mitsubishi Corp., a trading house that gets more than half its profit from commodities, rose 6.2 percent to 1,848 yen, while smaller rival Mitsui & Co. jumped 7.5 percent to 1,074 yen.

Crude oil for November delivery extended its gain to a third day, rising as much as 1.9 percent to $75.69 a barrel today on signs that the Organization of Petroleum Exporting Countries will reduce production. A $1 change in the price of a barrel of oil alters Mitsubishi's annual net income by 1 billion yen ($9.8 million) and Mitsui's by 1.8 billion yen, according to Mitsubishi UFJ Securities Co.

Easing Credit

Mitsubishi Estate surged 9.2 percent to 2,055 yen, while market leader Mitsui Fudosan Co. rose 6 percent to 1,937 yen. Nomura Real Estate Office Fund Inc. soared 15 percent to 621,000 yen, its steepest increase on record.

The London interbank offered rate, or Libor, which banks charge each other for three-month loans in dollars, fell by 36 basis points to 4.06 percent, the British Bankers' Association said, the biggest drop in nine months. That suggests efforts by central banks to unfreeze credit markets are starting to work. Seventeen listed property-related firms have gone bankrupt in Japan this year as banks reined in lending and home sales fell.

``A drop in the interbank lending rate shows that credit turmoil has eased somewhat,'' said Toyota Asset's Hamasaki. ``Major real estate companies have proven they can withstand the financial crisis, while smaller players have been wiped out.

Nikkei futures expiring in December rose 1.7 percent to 9,240 in Osaka and gained 1.9 percent to 9,240 in Singapore.

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