Japan Stocks Gain on U.S. Spending Plan, Bank Loan Growth

By Masaki Kondo and Patrick Rial

Dec. 8 (Bloomberg) -- Japanese stocks rose after U.S. President-elect Barack Obama announced the biggest public works program since the 1950s and as Japanese banks expanded loans at the fastest pace in at least 16 years.

Komatsu Ltd., the second-largest maker of earthmovers, rose 2.9 percent after Obama said he’s planning the biggest spending program since President Dwight D. Eisenhower created the interstate highway system. Mizuho Financial Group Inc., the country’s No. 3 bank by market value, gained 3.6 percent after companies turned to banks for funds as bond markets dried up. Tokyo Electric Power Co., Asia’s biggest power producer, advanced 1.8 percent after oil prices dropped the most since 1991 last week, reducing fuel costs.

The Nikkei 225 Stock Average climbed 63.80, or 0.8 percent, to 7,981.31 as of 9:48 a.m. in Tokyo. The broader Topix index rose 4.24, or 0.5 percent, to 790.26.

“A worsening employment situation usually gives lawmakers a mandate to take countermeasures,” Chisato Haganuma, a Tokyo- based strategist at Nomura Securities Co., said in an interview with Bloomberg Television. “These policies may trigger a rally in equity markets.”

The Topix fell 5.9 percent last week, the biggest decline since the five days ended Oct. 24, as looming prospects for the failure of General Motors Corp. and Chrysler LLC rattled investor confidence.

Roads, Bridges

Obama will boost investment in roads, bridges and public buildings to create and preserve 2.5 million jobs, he said on Dec. 6 in his weekly radio speech. The Labor Department said on Dec. 5 that U.S. companies cut payrolls at the fastest pace in 34 years, with the unemployment rate rising to the highest level since 1993.

Komatsu added 2.8 percent to 932 yen. Nippon Sheet Glass Co., which makes glass used for building facades, jumped 3.9 percent to 268 yen. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, gained 1.9 percent to 879 yen.

Mizuho advanced 2.6 percent to 216,100 yen. Fukuoka Financial Group Inc., the country’s largest regional lender, rose 3.8 percent to 299 yen, boosted by an upgrade to “neutral” from HSBC Holdings Plc.

Loans, excluding those by credit associations, rose 3.6 percent in November from a year earlier after growing 2.3 percent in October, the Bank of Japan said today. That was the biggest advance since the series started in 1992.

Tokyo Electric added 1.8 percent to 3,040 yen. Kansai Electric Power Co., the second-largest power producer in Japan, gained 1.1 percent to 2,660 yen.

Crude oil tumbled 25 percent last week to $40.81 a barrel, the biggest weekly drop since 1991, as the recession deepened in the U.S., Europe and Japan.

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