By Patrick Rial
Nov. 14 (Bloomberg) -- Japan stocks climbed, easing a weekly drop, as investors snapped up shares near the cheapest valuations on record, the yen fell and expectations grew that a financial summit this weekend will produce policies to stabilize markets.
Isuzu Motors Ltd., which saw its valuation slump to about 3 times trailing earnings last month, rose 4.8 percent. Kubota Corp. jumped 6.4 percent after the yen weakened from a two-week high and Nomura Holdings Inc. said sales of the region's largest maker of tractors will remain strong in Asia. Stocks pared gains in the afternoon as the number of public companies going bankrupt advanced toward a record.
The Nikkei 225 Stock Average gained 223.75, or 2.7 percent, to close at 8,462.39 in Tokyo, after having risen as much as 5.5 percent. The broader Topix index climbed 9.38, or 1.1 percent, to 846.91. The Nikkei lost 1.4 percent this week, while the Topix fell 3.7 percent, ending two weeks of gains for both gauges.
``I've been telling our clients that just looking at valuations, you can see that the declines are excessive,'' said Seiji Iwama, a Tokyo-based fund manager at Daiwa SB Investments Ltd., which oversees $53 billion. ``Japanese companies are not only cheap, they're in a relatively stronger position than their foreign rivals.''
The Standard & Poor's 500 Index rallied in the final hour of trading yesterday to close 6.9 percent higher in New York, as a rebound in oil prices boosted shares including Exxon Mobil Corp. The rise in crude helped Inpex Corp., Japan's largest energy explorer, jump 9.2 percent today.
Cheap Shares
Isuzu, Japan's third-biggest maker of commercial vehicles, climbed 4.8 percent to 152 yen. Nintendo Co., a video-game maker whose dividend yield rose above 5 percent as the stock price slumped, advanced 5.8 percent to 30,200 yen in Osaka. The company's Wii console sales soared 55 percent in the U.S. last month, an industry group said.
Shares on the main board of the Tokyo Stock Exchange trade at an average of 0.98 times book value. The average had never dropped below 1 prior to the current financial turmoil. The previous low of 1.18 in March 2003 coincided with the bottoming of Japan's market and was followed by a four-year rally that saw the Topix index more than double.
Leaders from the Group of 20 nations will begin a weekend meeting in Washington later today to coordinate government responses to the worst financial crisis in 80 years. European leaders including French President Nicolas Sarkozy and British Prime Minister Gordon Brown have called for restructuring the international regulatory system to deal with the credit crisis.
Asian Sales
Kubota, which generates more than half its sales abroad, added 6.4 percent to 551 yen, bringing its weekly climb to 20 percent. Tokyo-based Nomura analyst Shigeki Okazaki raised his rating on the stock to ``buy'' from ``neutral,'' citing demand in Asia for agriculture equipment as well as falling steel prices.
Konica Minolta Holdings Inc., a camera maker whose shares trade at 5.5 times earnings, rallied 13 percent to 617 yen, leading gains on the Nikkei. Today's move is the 14th time in the past month the stock has changed more than 10 percent in a day. Konica's operating profit rises by 1 billion yen ($10 million) for every 1 yen Japan's currency weakens against the euro.
The yen weakened to as much as 98.09 today versus the dollar from 95.62 at the close of stock trading in Tokyo yesterday. Against the euro, the yen dropped to as low as 125.73, from 119.23. A weaker yen increases the value of Japanese exporters' dollar-denominated sales when converted into local currency.
Bankruptcies Climb
Dix Kuroki Co. became the 28th listed company to go bankrupt in Japan this year, closing in on a record of 29 set in 2002, according to Tokyo Shoko Research Ltd. Shares of the condominium developer, with 18.1 billion yen ($186 million) in debt, lost 37 percent. Twenty-one of the 28 failures were property companies.
Azel Corp., which also builds and leases condominiums, said yesterday it has doubts about its viability and is in danger of breaking debt covenants. Its shares ended the day unchanged after losing as much as 11 percent. A measure of real estate shares included in the Topix posted the biggest decline among the 33 industry groups, losing 3 percent.
Inpex jumped 7.7 percent to 491,000 yen after it won rights to explore an offshore field in Indonesia and crude prices rebounded from a 21-month low. Crude oil futures retreated today after early gains.
``Explorers can't do anything without drilling rights,'' said Fumiyuki Nakanishi, an equity strategist at SMBC Friend Securities Co. ``Given natural resources run out sooner or later, only those who have rights will survive at the end of the day.''
Ulvac Inc., a Japanese maker of solar cells and semiconductor equipment, plunged 11 percent to 1,343 yen. Nomura cut the shares to ``buy'' from ``strong buy'' due to spending cuts at memory companies.
Nikkei futures expiring in December added 2.7 percent to 8,480 in Osaka and gained 3.1 percent to 8,510 in Singapore.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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