Japanese Refiner Shares Gain on Merger Plan; Mitsui Declines

By Masaki Kondo

Dec. 4 (Bloomberg) -- Japanese refining shares rose on speculation competition will ease after Nippon Oil Corp. and Nippon Mining Holdings Inc. said they may merge. Trading companies declined as metal prices fell, dimming profit prospects.

Nippon Oil, Japan’s largest refiner, and Nippon Mining surged more than 9 percent. Mitsui & Co., a trading house that gets more than half its profit from commodities, dived 3.6 percent after metal prices in London tumbled to a four-year low. Taiheiyo Cement Corp. jumped 19 percent while Sumitomo Osaka Cement Co. climbed 12 percent after Credit Suisse Group rated them “outperform.”

The Nikkei 225 Stock Average rose 26.30, or 0.3 percent, to 8,030.40 at 10:31 a.m. in Tokyo, while the broader Topix index slumped 0.79, or 0.1 percent, to 798.40. Almost the same number of shares fell and rose on the Topix. The Standard & Poor’s 500 Index drifted between gains and losses five times in New York before closing 2.6 percent higher.

“With the gain in the U.S. market, the Nikkei will hopefully stay above 8,000,” Juichi Wako, a Tokyo-based strategist at Nomura Securities Co., said in an interview with Bloomberg Television. “A rally in exporters like automakers is the key to a sustainable rebound. It remains to be seen whether we’ve entered an upward trend.”

Nippon Oil soared 9.7 percent to 351 yen, while Nippon Mining leapt 13 percent to 290 yen. A gauge of refiners posted the steepest advance among 33 industry groups on the Topix.

Nippon Oil today said it’s considering merging with Nippon Mining, Japan’s biggest copper producer. The companies will make a decision on the merger today after separate board meetings, Nippon Oil said in a filing to the bourse.

Metals Slump

Copper futures for March delivery declined as much as 5.3 percent to the lowest level since July 2005 on concern the global recession will cripple demand. A measure of six metals traded on the London Metal Exchange extended its drop to a fifth day to the lowest level since December 2004.

Mitsui, the nation’s second-largest trading company by value, sank 3.6 percent to 732 yen, while bigger rival Mitsubishi Corp. lost 1.9 percent to 1,051 yen. Sumitomo Corp. slumped 2.9 percent to 749 yen.

Taiheiyo, Asia’s biggest cement producer, soared 19 percent to 139 yen, and Sumitomo Osaka jumped 12 percent to 196 yen.

Sanyo Electric Co. dived 12 percent to 148 yen, while Panasonic Corp., the world’s largest maker of consumer electronics, fell 2.1 percent to 1,068 yen. The Nikkei newspaper said Panasonic plans to increase its offer for a controlling stake in Sanyo to 130 yen a share, lower than the 250 yen Sanyo is seeking.

Nikkei futures expiring in December slipped 0.5 percent to 8,000 in Osaka and slid 0.4 percent to 8,000 in Singapore.

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