Japanese Stocks Surge on Bank Support Plans; Nikkei Jumps 13%

By Masaki Kondo

Oct. 14 (Bloomberg) -- Japanese stocks surged, driving the Nikkei 225 Stock Average up 13 percent and triggering a halt in futures trading after U.S. and European governments stepped up measures to avert a collapse in the global financial industry.

Sumitomo Trust and Banking Co., Japan's fifth-biggest listed bank, jumped 10 percent as people briefed on the matter said the U.S. will buy stakes in nine banks. Mitsubishi UFJ Financial Group Inc. was set to gain after closing its $9 billion investment in Morgan Stanley. Japanese markets were closed yesterday for a holiday, when global stock markets surged.


``Panic selling that prevailed in the market last week is over,'' said Mamoru Shimode, chief equity strategist at Deutsche Bank AG, in an interview with Bloomberg Television. ``Investors will start assessing the impact of the financial crisis on company earnings.''

The Nikkei 225 Stock Average climbed 1,034.46, or 13 percent, to 9,310.89 as of 9:53 a.m. in Tokyo, set for the biggest advance since Oct. 2, 1990. The broader Topix index rose 102.18, or 12 percent, to 943.04. Last week, the Nikkei tumbled 24 percent and the Topix fell 20 percent, both the biggest weekly drops on record.

Governments across the globe stepped up measures to support banks after global stock markets lost $7 trillion of their value last week, driving the MSCI World Index down by 20 percent.

The Bush administration will announce a plan that includes spending about half of a total of $250 billion for stakes in nine banks including Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley, said the people.

France, Germany, Spain, the Netherlands and Austria have committed $1.8 trillion to guarantee bank loans and take stakes in lenders. The U.K. agreed to invest 37 billion pounds ($64 billion) in banks including Royal Bank of Scotland Group Plc.

Sumitomo Trust jumped 12 percent, the most since Sept. 19, to 656. Mitsubishi UFJ, Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., Japan's three biggest listed banks, weren't traded because orders to buy outnumbered those to sell. Only 30 stocks on the Nikkei 225 were traded.

The Osaka Securities Exchange, Japan's main derivatives market, halted trading in Nikkei 225 Stock Average futures for 15 minutes until 9:25 a.m. after the stock-market rally triggered circuit breakers.

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