Japan Stocks Jump After China Rate Cut Spurs Oil, Copper Rally

By Masaki Kondo

Nov. 27 (Bloomberg) -- Japanese stocks advanced, led by resource and shipping companies, after China’s biggest interest- rate cut in 11 years sparked a rebound in commodity prices.

Mitsubishi Corp., which gets more than half its earnings from commodities, climbed 5.6 percent after China cut its benchmark rate to spur growth, sending oil and copper prices higher. Nippon Yusen K.K., Japan’s biggest shipping company, gained 5 percent after UBS AG recommended buying the shares. Panasonic Corp. fell 4.6 percent on a media report the company will cut its annual earnings target.

The Nikkei 225 Stock Average climbed 201.96, or 2.5 percent, to 8,415.18 as of 9:33 a.m. in Tokyo. The broader Topix index rose 16.33, or 2 percent, to 833.55, with more than three stocks rallying for each that fell. In New York, the Standard & Poor’s 500 Index rallied 3.5 percent, bringing its four-day gain to 18 percent, after President-elect Barack Obama named former Federal Reserve Chairman Paul Volcker to head an economic advisory board.

“Investors are waiting for authorities to implement more measures to support the economy,” Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co. said in an interview with Bloomberg Television. Volcker’s nomination “made Obama’s economic policies more defined.”

Credit losses and writedowns at financial companies nearing $1 trillion have prompted central banks and governments to cut interest rates and boost spending to stem a global economic contraction. The International Monetary Fund predicted this month the U.S., Europe and Japan may have their first simultaneous recession in the post-World War II era.

Rate Cut

The People’s Bank of China yesterday cut its one-year lending rate by 108 basis points to 5.58 percent, less than three weeks after announcing a 4 trillion yuan ($586 billion) economic stimulus plan. Meanwhile, the European Union proposed a 200 billion euro ($259 billion) stimulus package.

Mitsubishi, Japan’s biggest trading house by value, climbed 5.6 percent to 1,114 yen, while Inpex Corp., Japan’s largest oil and gas explorer, jumped 7.7 percent to 561,000 yen, extending its gain to a fourth day. Sumitomo Metal Mining Co., the nation’s second-largest copper smelter, rose 7.2 percent to 809 yen.

Crude oil for January delivery advanced 7.2 percent yesterday to settle at $54.44 a barrel in New York, paring losses to 63 percent from a record $147.27 on July 11. Copper futures for March delivery rose 2.3 percent.

Nippon Yusen leapt 5 percent to 484 yen, and Mitsui O.S.K. Lines Ltd., Japan’s second-biggest shipping line, added 7.2 percent to 477 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, jumped 4.6 percent to 363 yen. Jun Harada, a Tokyo-based analyst for UBS, raised his ratings on the companies to “buy” from “neutral,” citing lower fuel prices.

Panasonic Earnings

Panasonic, the world’s largest maker of consumer electronics, sank 4.6 percent to 1,285 yen, making it the worst performer on the Nikkei. The company will cut its full-year forecast for operating profit by more than 30 percent, national broadcaster NHK reported today without citing anyone. Panasonic, which was cut to “neutral” from “buy” yesterday by Merrill Lynch & Co., earlier forecast operating profit to rise 7.8 percent in the year to March 31.

Yesterday, the value of stocks traded in Tokyo tumbled by a fifth from the previous day to the lowest level since a half-day session on Dec. 28. The daily trading value had been lower than the yearly average of 2.4 trillion yen since Nov. 5.

“The global economy is still deteriorating and this isn’t the time yet for investors to feel reassured,” said Ichiyoshi’s Akino. “The thin trading volumes show how unsure people are about the market outlook.”

Nikkei futures expiring in December added 3.1 percent to 8,390 in Osaka and gained 3.1 percent to 8,415 in Singapore.

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