Japan Bank Stocks Rise as Earnings Concern Eases; Inpex Falls

By Masaki Kondo

Dec. 19 (Bloomberg) -- Japan’s bank stocks rose as the government’s planned purchase of shares held by lenders eased writedown concerns. Inpex Corp. led oil producers lower as crude sank to a four-year low.

Mitsubishi UFJ Financial Group Inc., the nation’s largest listed bank, gained 4.2 percent, while No. 3 Sumitomo Mitsui Financial Group Inc. added 2.9 percent. Inpex, Japan’s largest oil and gas explorer, fell 4.2 percent after oil traded below $36 a barrel as the global recession sapped demand.

The Nikkei 225 Stock Average edged up 4.94, or 0.1 percent, to 8,672.17 as of 10:04 a.m. in Tokyo, set for a 5.3 percent weekly gain. The broader Topix index rose 3.30, or 0.4 percent, to 841.99, with 18 of its 33 industry groups rallying. The Topix added 3.5 percent on the week.

The Nikkei is set to lose 43 percent in 2008, its worst year on record, as Japan, the U.S. and Europe slipped into their first simultaneous recession since World War II and the yen soared to a 13-year high, diminishing the value of earnings overseas.

The Cabinet Office said today it will buy as much as 20 trillion yen ($223 billion) in shares held by domestic banks. Mitsubishi UFJ and four of its largest rivals are seeking to raise more than $30 billion after record declines in shareholdings eroded their capital.

Mitsubishi UFJ gained 4.2 percent to 565 yen, while Sumitomo Mitsui added 2.9 percent to 395,000 yen. Chuo Mitsui Trust Holdings Inc. rose 3.1 percent to 434 yen after Merrill Lynch & Co. upgraded the bank to “buy” from “neutral.”

Oil Glut

Inpex dived 4.2 percent to 597,000 yen, while closest rival Japan Petroleum Exploration Co. sank 2.2 percent to 3,610 yen. A gauge of mining companies posted the steepest dive among 33 industry groups on the Topix.

Slumping demand created a glut of oil, driving prices down 75 percent from a record $147.27 on July 11. Crude oil for January delivery declined 9.6 percent to $36.22 a barrel in New York yesterday, the lowest settlement since June 2004.

Asahi Glass Co., Asia’s biggest maker of the material, dropped 1.8 percent to 450 yen, set for the lowest level since September 1982. The company yesterday slashed its full-year profit target by 28 percent, because of plunging sales of glass for flat-panel displays. The company said it’s facing “drastically” diminishing demand globally.

The Bank of Japan will conclude its two-day policy meeting today after its U.S. counterpart cut its benchmark rate to as low as zero for the first time ever.

Jiji Press and the Mainichi newspaper said Japan’s central bank is likely to leave its interest rate unchanged, while traders see a 56 percent chance the BOJ will cut borrowing costs from 0.3 percent, according to calculations by JPMorgan Chase & Co. using overnight interest-rate swaps.

Nikkei futures expiring in March added 0.4 percent to 8,690 in Osaka and inched up 0.3 percent to 8,690 in Singapore.

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