Japan Stocks Rally From Record Monthly Loss; Sanyo Set to Surge

By Masaki Kondo

Nov. 4 (Bloomberg) -- Japan stocks rose, rebounding from the Nikkei 225 Stock Average's worst monthly slump on record, after lower interest rates charged between banks raised speculation lending may rebound as credit markets ease.

Mizuho Financial Group Inc., which last week more than halved its full-year earnings forecast, jumped 8.2 percent. NTT DoCoMo Inc., Japan's biggest mobile-phone carrier, added 3.6 percent after posting a profit gain. Sanyo Electric Co. was set to soar after the Nikkei newspaper said bigger rival Panasonic Corp. agreed to buy the company. Nissan Motor Co. sank 7.5 percent after the carmaker cut it profit target and dividend.

The Nikkei climbed 384.60, or 4.5 percent, to 8,961.58 as of 9:34 a.m. in Tokyo. The broader Topix index rose 35.48, or 4.1 percent, to 902.60. Japan's markets were closed yesterday for a national holiday. On Oct. 31, the Nikkei lost 5 percent, capping a 24 percent drop for the month, the worst on record.

``An excessive decline the other day will prompt investors to buy in the market today,'' Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television.

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in U.S. currency slid 0.17 percentage point to 2.86 percent yesterday, according to the British Bankers' Association. That's the lowest level since the failure of Lehman Brothers Holdings Inc. on Sept. 15.

Dividend Yield

Dividend yields on the Nikkei's constituents reached 2.52 percent on Oct. 31, higher than the 1.48 percent yields on Japanese government 10-year bonds. The stock yields exceeded 2 percent on Oct. 3 for the first time since at least July 1989.

Mizuho, Japan's second-largest listed bank, climbed 8.2 percent to 251,000 yen, while market leader Mitsubishi UFJ Financial Group Inc. rose 5.2 percent to 629 yen. Resona Holdings Inc., Japan's fourth-biggest bank, advanced 6.6 percent to 106,200 yen even after cutting annual profit forecast by a third.

DoCoMo, Japan's most profitable wireless carrier, jumped 3.6 percent to 160,500 yen, while parent Nippon Telegraph & Telephone Corp. gained 6.4 percent to 417,000 yen. DoCoMo's net income rose to 173.1 billion yen ($1.75 billion) in the second quarter from 123.7 billion yen a year earlier, as lower handset subsidies reduced costs.

Sanyo wasn't traded as orders to buy outnumbered those to sell, while Panasonic leapt 8.3 percent to 1,637 yen. The companies will hold a press conference on Nov. 7 to announce details of Panasonic's plan to buy Sanyo, Nikkei said, without saying where it obtained the information.

A company official familiar with the negotiations earlier said Panasonic will seek to buy control of Sanyo from its biggest shareholders Goldman Sachs Group Inc., Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co.

Nissan, Japan's third-largest carmaker, tumbled 7.5 percent to 456 yen after the company more halved its profit forecast and eliminated its dividend. The company expects net income of 160 billion yen for the year ending March 31, compared with its May estimate of 340 billion yen, it said on Oct. 31.

Nikkei futures expiring in December added 6 percent to 8,960 in Osaka and gained 6.6 percent to 8,950 in Singapore.

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