Japan's Stocks Rise on Weaker Yen; Panasonic Poised to Advance

By Masaki Kondo

Oct. 29 (Bloomberg) -- Japan's stocks gained as speculation the Bank of Japan will cut rates spurred a sharp decline in the yen, boosting the outlook for company earnings.

Panasonic Corp., the world's largest maker of consumer electronics, was poised to jump after profit beat its quarterly target, while robot maker Fanuc Ltd. climbed 7.8 percent. Honda Motor Co. was set to gain after yesterday's 14 percent surge. The Standard & Poor's 500 Index soared 11 percent yesterday in New York after a rally in Japan that lifted the Nikkei 225 Stock Average from a 26-year low.

``Expectations of the BOJ's rate cut, the weakening local currency and the rally in U.S. stocks will have synergistic effects,'' said Hiroichi Nishi, an equities manager at Tokyo- based Nikko Cordial Securities Inc., said on Bloomberg TV. ``When the plunge is deep, the rebound will be big.''

The Nikkei 225 Stock Average climbed 141.88, or 1.9 percent, to 7,763.80 as of 9:03 a.m. in Tokyo. The broader Topix index rose 13.07, or 1.7 percent, to 797.10.

Yesterday, the yen depreciated the most against the dollar since January 1974, while weakening against the euro the most since the European currency's debut in 1999. The stronger Japanese currency had forced Canon Inc. and Sony Corp. to cut annual earnings forecasts.

The Bank of Japan is considering lowering its benchmark rate by a quarter percentage point to 0.25 percent, Nikkei English News reported. In the U.S., the Federal Reserve will announce its decision as early as today on interest rates.

Panasonic yesterday reported 55.5 billion yen ($564 million) in second-quarter net income, which exceeded the 32 billion yen forecast implied by the company's first-half projection. Meanwhile, Honda, Japan's second-biggest automaker, said second- quarter net income fell 41 percent as U.S. demand waned and the yen rose.

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