Japan Stocks Rise; Nikkei Posts Biggest 3-Day Rally in 38 Years

By Masaki Kondo

Oct. 30 (Bloomberg) -- Japan stocks soared, sending the Nikkei 225 Stock Average to its sharpest three-day advance in at least 38 years, as a gain in commodity prices and a weaker yen boosted the profit prospects for resource companies and carmakers.

Inpex Corp., the nation's largest oil explorer, jumped 10 percent. Honda Motor Co., which gets more than half its profit from North America, added 13 percent while rival Mazda Motor Corp. jumped 25 percent, the most in at least three decades, after the yen weakened to 99.12 against the dollar. Mobile-phone carrier Softbank Corp. surged by its daily limit of 13 percent after saying it will generate positive cash flow from this year.

The Nikkei 225 climbed 817.86, or 10 percent, to close at 9,029.76 in Tokyo, the fourth-biggest gain in its 59-year history. The broader Topix index rose 69.05, or 8.3 percent, to 899.37. The Nikkei had fallen 41 percent in the past six months, steeper than the Standard & Poor's 500 Index's 33 percent slide and a 34 percent drop in Europe's Dow Jones Stoxx 600 Index.

``Japan's market will likely rebound faster as it has slumped more than other major markets'' said Masaru Hamasaki, senior strategist at Toyota Asset Management Co. in Tokyo, which manages about $15 billion. If the yen stays at about 100 versus the dollar, ``it'll lead to a decline in material costs in a few months' time, benefiting manufacturers.''

The Nikkei 225 recorded a three-day gain of 26 percent, the steepest advance since Nikkei Inc. took over the benchmark from the Tokyo Stock Exchange in July 1970.

Japanese Prime Minister Taro Aso will today announce economic stimulus measures worth 5 trillion yen, the Yomiuri newspaper reported today. That would follow interest rates cuts by central banks in the U.S., China and Taiwan in the past two days to stimulate demand. European Central Bank Governor Jean- Claude Trichet said on Oct. 27 he may cut rates next week.

Crude oil for December delivery climbed 4.6 percent to $70.59 a barrel, after having risen the most in a month yesterday. 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.

Nikkei futures expiring in December added 8.6 percent to 9,010 in Osaka and gained 8.8 percent to 9,005 in Singapore.

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