Japan Stocks Rise a 3rd Day as Commodities Rally, Yen Weakens

By Masaki Kondo

Oct. 30 (Bloomberg) -- Japanese stocks rose a third day after commodity prices advanced, while a weakening yen boosted the earnings outlook for companies dependent on overseas demand.

Inpex Corp., the nation's largest oil explorer, jumped 6.2 percent. Toyota Motor Corp., Japan's No. 1 carmaker, added 3.7 percent, while subsidiary Hino Motors Ltd. dived 8.1 percent after slashing its earnings target. Softbank Corp., Japan's No. 3 mobile carrier, surged by its daily limit of 13 percent after forecasting earnings will grow by a quarter next year.

The Nikkei 225 Stock Average climbed 227.40, or 2.8 percent, to 8,439.30 as of 10:01 a.m. in Tokyo. The broader Topix index rose 16.68, or 2 percent, to 847.00. The Nikkei surged 7.7 percent yesterday, extending its two-day gain to 15 percent.

``Currency stabilization will lend some resilience to Japanese stocks,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.

Crude oil for December delivery climbed 7.6 percent to $67.50 a barrel in New York yesterday, the steepest jump in a month. A $1 gain in a barrel of crude boosts Inpex's annual profit by 2.2 billion yen ($22 million), the company said in May.

Inpex climbed 6.2 percent to 530,000 yen. Closest rival Japan Petroleum Exploration Co. added 3.5 percent to 3,890 yen. Mitsui & Co., a trading company that gets more than half its profit from commodities, rose 9.5 percent to 914 yen.

Toyota, which gets three quarters of its sales overseas, added 3.7 percent to 3,630 yen, while smaller rival Mazda Motor Corp. advanced 6.1 percent to 210 yen. Hino, Japan's biggest maker of heavy-duty trucks, declined 8.1 percent to 226 yen.

Lower Forecasts

Hino yesterday cut its full-year net income forecast by 91 percent as domestic sales fell. Of 183 Japanese companies that have reported first-half earnings so far, 53 percent lowered profit targets, according to Shinko Research Institute Co.

The Japanese currency weakened against the dollar to as much as 98.56 from 96.92 at the close of stock trading in Tokyo yesterday, while depreciating against the euro to as weak as 128.96 from 123.29. A strong yen cuts the value of overseas sales of Japanese businesses, and has led companies including Canon Inc. and Sony Corp. to reduce profit targets in the past week.

Japan Prime Minister Taro Aso will today announce economic stimulus measures worth 5 trillion yen, the Yomiuri newspaper reported, without saying where it got the information. The package will include 2 trillion yen in assistance for households, the report said.

Share Buyback

Softbank leapt 13 percent to 850 yen, brining a two-day gain to 31 percent. The company yesterday said operating profit will probably climb to 420 billion yen in the next fiscal year as it expects to boost user spending on wireless services. Goldman Sachs Group Inc. and Nomura Securities Co. raised their ratings on the company.

Komatsu Ltd., the world's second-biggest maker of earthmoving equipment, wasn't traded as orders to buy outnumbered those to sell. The company yesterday lowered its annual earnings forecast by a tenth and said it would spend as much as 30 billion yen to buy back shares.

``The buyback clearly shows management sees the stock as undervalued at the current level,'' said Kunio Sakaida, an analyst for Goldman, wrote in a report today. He maintained his neutral rating on Komatsu.

Nikkei futures expiring in December added 1.7 percent to 8,440 in Osaka and gained 1.8 percent to 8,430 in Singapore.

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