Japan Stocks Rise on Revived Bank Rescue Talks; Shippers Drop

By Masaki Kondo

Oct. 1 (Bloomberg) -- Japanese stocks rose as speculation U.S. lawmakers will salvage a bank-rescue package overshadowed the lowest confidence in five years at domestic companies.

Nomura Holdings Inc., Japan's No. 1 brokerage, added 6 percent, while rival Shinko Securities Co. gained 5.9 percent. Mitsui O.S.K. Lines Ltd., the nation's second-biggest shipping company, dropped 4.1 percent after transport fees for commodities completed their biggest ever quarterly decline. The Topix index sank to the lowest in almost four years yesterday after the U.S. House of Representatives rejected the bank bailout.

``Investors can expect the U.S. government to bring some sort of rescue measure eventually,'' said Hiroshi Morikawa, a Tokyo-based senior strategist at MU Investments Co., which manages $14 billion. ``However, the sense of relief won't last long, as the passage of such a bill represents the consequences of our worsening global economy.''

The Nikkei 225 Stock Average climbed 108.40, or 1 percent, to close at 11,368.26 in Tokyo. The broader Topix rose 13.72, or 1.3 percent, to 1,101.13. Almost three stocks advanced for every two that slumped on the Topix.

The U.S. Senate will vote tonight on a $700 billion financial-rescue plan. The Standard & Poor's 500 Index yesterday had its biggest rally since July 2002, a day after plunging the most in two decades when the House voted down the bailout.

Confidence among large manufacturers fell to minus 3 points, the first negative reading since 2003, the Bank of Japan's quarterly Tankan survey showed today. Large and small businesses now expect pretax profit to fall 8.1 percent this year, almost twice as much as three months ago, the report showed.

Nikkei futures expiring in December added 1 percent to 11,430 in Osaka and gained 0.8 percent to 11,425 in Singapore.

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