Japan Stocks Rise, Led by Drugmakers; Developers Fall on Rents

By Masaki Kondo

Nov. 17 (Bloomberg) -- Japan's stocks rose, led by drugmakers and train operators, as the nation's first recession since 2001 raised the attractiveness of companies whose earnings are insulated against a slowdown.

Daiichi Sankyo Co., Japan's third-biggest drugmaker surged 5.4 percent, while West Japan Railway Co., the nation's No. 3 rail operator by value, gained 6 percent. GS Yuasa Corp. surged 15 percent after the maker of batteries and lighting equipment reported a first-half profit gain. Mitsubishi Estate Co. tumbled 5.4 percent after the Nikkei newspaper said rents for Tokyo offices fell for the first time in six years.

The Nikkei 225 Stock Average rose 60.19, or 0.7 percent, to close at 8,522.58 in Tokyo, after losing as much as 2.9 percent and rising 3.6 percent. The broader Topix index added 3.58, or 0.4 percent, to 850.49. The total value of share traded in Tokyo today was the lowest since Sept. 1. The Nikkei, down 44 percent so far this year, finished its worst month on record in October.

``Shares are so cheap that investors are wanting to get back into stocks,'' said Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co. ``Looking past companies with low earnings hopes and those that depend on deteriorating overseas demand, the remaining choice is defensive stocks.''

Japan's gross domestic product dropped an annualized 0.4 percent in the third quarter, the Cabinet Office said before markets opened, confirming the economy entered a recession. Economists had estimated a 0.1 percent gain. The International Monetary Fund said on Nov. 7 the U.S., Europe and Japan may have their first simultaneous recession in the post-World War II era.

Nikkei futures expiring in December gained 0.1 percent to 8,490 in Osaka and dipped 0.4 percent to 8,485 in Singapore.

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