Japan Stocks Climb a 2nd Day on Commodity Gains, U.S. Election

By Patrick Rial and Kotaro Tsunetomi

Nov. 5 (Bloomberg) -- Japanese stocks advanced for a second day as a rise in commodities prices sparked gains by resource companies and investors speculated the next U.S. president will take additional steps to spur economic growth.

Mitsui & Co., Japan's second-largest trading company, jumped 7.9 percent after oil surged the most in six weeks. Honda Motor Co., which gets half its sales in North America, climbed 7.9 percent on speculation U.S. lawmakers may push for more policies to boost growth. Mizuho Financial Group Inc., Japan's second- biggest listed bank, gained 13 percent as money market rates continued to tumble, indicating credit markets are easing.

The Nikkei 225 Stock Average rose 202.03, or 2.2 percent, to 9,316.63 as of 10:32 a.m. in Tokyo, the highest since Oct. 15. The gauge is up 30 percent since falling to a 26-year low on Oct 27. The broader Topix index added 36.48, or 4 percent, to 947.18.

``Once the election is finished, the hopes are that the incoming president will start formulating some new economic relief measures,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo. ``This market is oversold, and people are jumping back in as dividends remain high and there are some stocks with solid earnings outlooks. The Nikkei should be heading back to 10,000 soon.''

In the U.S., the Standard & Poor's 500 Index surged 4.1 percent, the biggest presidential Election Day rally in 24 years, as oil rose and people briefed on the matter said the government may broaden the focus of its rescue program.

Commodity Rally

Mitsui, which generates more than half its profit from commodities, rose 7.9 percent to 998 yen. Inpex Holdings Inc., Japan's biggest oil explorer, rallied 13 percent to 657,000 yen after saying it won approval to buy a 20 percent stake in a Brazilian oil field. Sumitomo Metal Mining Co., Japan's biggest nickel producer, rose 4.2 percent to 786 yen.

Crude oil for December delivery rose 10 percent to $70.53 a barrel in the New York yesterday, the biggest one-day gain since Sept. 22. Copper added 6.4 percent, while nickel surged 8.1 percent as the dollar weakened against global currencies.

Honda, Japan's second-biggest carmaker, climbed 7.9 percent to 2,610 yen. Komatsu Ltd., the world's second-largest maker of construction machinery, gained 6.1 percent to 1,220 yen. Nintendo Co., which depends on overseas sales for 80 percent of its revenue, rose 9.8 percent to 35,850 yen in Osaka trading.

Voting concludes today for the U.S. presidential election between Democrat Barack Obama, the favorite in polls, and Republican John McCain.

Stimulus Plans

The Treasury may take stakes in non-bank financial firms amid signs the $163 billion it has given to banks in exchange for equity is restoring investor confidence, people familiar with the matter said. Economists including Harvard University's Martin Feldstein, New York University's Nouriel Roubini and Larry Hatheway of UBS AG are calling for the next U.S. president to enact stimulus packages worth $300 billion or more.

Mizuho soared 13 percent to 281,200 yen. Mitsubishi UFJ Financial Group Inc., the country's biggest lender by value, rose 7.8 percent to 676 yen.

The cost of borrowing dollars for one month in London fell to the lowest level in almost four years, while the three-month rate slumped to the lowest since June, spurred on by central-bank cash injections and interest-rate cuts worldwide. The London interbank offered rate, or Libor, for one-month loans slid 18 basis points to 2.18 percent yesterday, the lowest level since November 2004, and the 17th-straight decline.

Fast Retailing Co., the operator of Japan's Uniqlo casual clothing store chain, slumped 6.3 percent to 10,300 yen after reporting a drop in same-stores-sales.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net.