Japan Stocks Rise for a 3rd Day, on Rescue Hopes, Cargo Rates

By Patrick Rial and Toshiro Hasegawa

Dec. 10 (Bloomberg) -- Japan stocks rose a third day, led by real estate and shipping companies, on expectations the government will extend aid to developers, and as cargo fees for commodities climbed.

Tokyu Land Corp., a developer with properties in western Tokyo, soared 16 percent after a newspaper said the government may give a line of credit to struggling builders. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 bulk shipper, surged 10 percent after the Baltic Dry Index advanced a second day. Honda Motor Co. soared 10 percent as U.S. lawmakers agreed on the outline of a rescue plan for the nation’s automakers.

The Nikkei 225 Stock Average rose 264.37, or 3.2 percent, to 8,660.24 at the close of trading in Tokyo. The broader Topix index added 16.61, or 2 percent, to 834.55, its third-consecutive gain, and the longest winning streak since Oct. 30.

“Views are divided on whether emergency loans from the government will help the real estate industry, but at least the unending tide of bad news has been checked, prompting a share rebound,” said Masanori Ikunaga, who helps manage the equivalent of $4.1 billion at Sumitomo Mitsui Asset Management Co.

The global recession prompted banks to rein in lending to builders while housing demand slumped. A record 31 listed companies in Japan have gone bankrupt in 2008, with 23 of those in the property and construction industries. The government may give loans of up to 2 billion yen ($22 million) to small and midsize developers that have been unable to refinance through banks, the Nikkei newspaper reported.

REITs Rise

Tokyu Land surged 16 percent to 317 yen. K.K. DaVinci Advisors, which runs Japan’s biggest private real estate fund, rallied 6.5 percent to 6,700 yen. Pacific Holdings Co., which secured funding last month from Chinese companies, according to the Nikkei, jumped 15 percent to 3,780 yen. Mitsubishi Estate Co., Japan’s second-biggest developer, surged 7.6 percent to 1,417 yen.

Creed Office Investment Corp. soared by its 5,000 yen daily limit to 68,800 yen after Ichigo Asset Group decided to take control of the asset manager of a Japanese real estate investment trust. The 40-member Tokyo Stock Exchange REIT Index, which is down 52 percent on the year, climbed 11 percent, the most since the measure started in March 2003.

Mitsui O.S.K. leapt 10 percent to 550 yen. Nippon Yusen K.K., Japan’s No. 1 shipping line operator by sales, gained 6.5 percent to 528 yen.

Baltic, Cotango

The Baltic Dry Index advanced for a second day from a 22- year low. The premium for 12-month oil futures contracts over the spot price, a situation known as contango, reached the highest level in a decade last week.

“With long-dated oil contracts at a much higher premium to the spot price, the market is telling us that commodities are bound to rise and that the cyclical stocks have been oversold,” said Sumitomo Mitsui’s Ikunaga.

Congressional Democrats and White House negotiators agreed on the outline of a $15 billion plan to give General Motors Corp. and Chrysler LLC federal loans to stay in business. Asian carmakers and parts suppliers surged in the afternoon on speculation the bailout will ease turmoil in the industry.

Honda, Japan’s second-biggest carmaker, climbed 10 percent to 2,035 yen. Larger rival Toyota Motor Corp. jumped 6.6 percent to 2,930 yen. Aisin Seiki Co., a Toyota unit and Japan’s biggest maker of car transmissions, increased 7.8 percent to 1,300 yen.

“The bailout is a short-term positive but it won’t be a long-term solution. A drastic restructuring of the auto industry is needed,” said Kazuyuki Terao, who oversees about $1.3 billion as chief investment officer of RCM Japan Ltd. “Even those that will survive after this consolidation, it will still be a tough environment.”

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.