Japan Stocks Rebound From Rout on Valuations; Utilities Gain

By Masaki Kondo

Dec. 3 (Bloomberg) -- Japanese stocks rose as yesterday’s rout made shares cheap and central banks took steps to stem the global recession.

Mitsubishi Motors Corp. climbed 4.2 percent, breaking a five-day losing streak. Kyushu Electric Power Co. added 1.7 percent as lower oil prices eased fuel costs and investors sought stocks whose earnings are insulated from the economic slowdown. Fast Retailing Co., Japan’s biggest clothing retailer, was set to rise after a 32 percent jump in November sales prompted Nomura Securities Co. to raise its rating on the shares.

The Nikkei 225 Stock Average climbed 86.61, or 1.1 percent, to 7,950.30 as of 9:05 a.m. in Tokyo. The broader Topix index advanced 12.22, or 1.6 percent, to 799.34. Yesterday, both gauges posted the biggest retreat since Nov. 20.

“Yesterday’s drop is likely to induce investors to snap up shares on the cheap,” Hiroichi Nishi, a Tokyo-based equities manager at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. “With the bleak outlook for the global economy and the lingering financial crisis, defensive shares like utilities and train operators are appealing.”

About a third of Japanese stocks have fallen by more than 50 percent this year. Companies on the Topix index pay dividends worth 2.54 percent of their share prices, almost twice the yield on the nation’s 10-year government bonds.

The collapse of the American mortgage market sparked a financial crisis that pushed the U.S., Europe and Japan into the first simultaneous recession in the post-World War II era. The Federal Reserve yesterday extended the terms of emergency- financing programs, aligning their expiration dates with other central bank efforts to mitigate the credit crisis.

That followed a rate cut during stock-trading hours yesterday by Australia’s central bank and a pledge by the Bank of Japan that it would accept lower-grade corporate debt as collateral for loans.

Nikkei futures expiring in December added 1.8 percent to 8,020 in Osaka and gained 1.3 percent to 8,025 in Singapore.

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