Japan Stocks Rebound as Weaker Yen Boosts Earnings Prospects

By Masaki Kondo

Jan. 16 (Bloomberg) -- Japanese stocks rebounded, narrowing the Nikkei 225 Stock Average’s biggest weekly drop in almost three months, as a weaker yen raised speculation company earnings will improve.

Honda Motor Co., which gets more than half its profit from North America, jumped 3.5 percent, while Sony Corp. added 3.2 percent. Mitsubishi Materials Corp., Japan’s third-largest copper producer, leapt 2.3 percent after prices for the metal rose for the first time in three days. Tokyo Steel Manufacturing Co. leapt 4.4 percent on a newspaper report the company’s annual earnings may triple. Nippon Yusen K.K. sent shipping lines lower after commodity transport fees broke a seven-day winning streak.

“The weakening yen will help push up Japanese stocks,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television. “There’s not much encouraging news about earnings, so the rebound won’t be big.”

The Nikkei climbed 132.99, or 1.7 percent, to 8,156.30 as of 10:14 a.m. in Tokyo. The broader Topix index rose 14.27, or 1.8 percent, to 810.26, with more than two stocks gaining for each that fell.

The Nikkei headed for an 7.6 percent decline this week, the worst since Oct. 24, on concern companies from Sony to Toshiba Corp. will miss earnings’ forecasts and as a record decline in machinery orders pointed to a prolonged global recession. The Topix was poised for a 5.2 percent drop.

Honda, Japan’s second-biggest automaker, rose 3.5 percent to 1,928 yen, while Sony, which gets a quarter of its sales from the U.S., added 3.2 percent to 2,045 yen. Denso Corp., an auto- part affiliate of Toyota Motor Corp., climbed 2.9 percent to 1,575 yen after Mitsubishi UFJ Securities Co. raised its rating on the stock to “outperform” from “market perform.”

Weakening Yen

The yen weakened to as much as 90.03 against the dollar today from 88.97 at the 3 p.m. close of stock trading in Tokyo yesterday. The dollar rose against the yen and euro after European Central Bank President Jean-Claude Trichet yesterday signaled he may cut interest rates again in March after the ECB reduced its benchmark rate by half a percentage point to 2 percent. A weaker yen boosts the value of overseas sales for Japanese companies.

Mitsubishi Materials added 2.3 percent to 225 yen. Copper futures for March delivery gained for the first time in three days today, rising as much as 3.9 percent. Sumitomo Metal Mining Co., Japan’s second-biggest copper smelter, added 3 percent to 888 yen.

Tokyo Steel gained 4.4 percent to 995 yen. The company’s operating profit at the parent level may surge to 52 billion yen ($578 million) in the year to March 31 from 15.2 billion yen a earlier, the Nikkei newspaper reported today.

Falling Fees

Nippon Yusen, Japan’s largest shipping company, slumped 2.5 percent to 498 yen, leading its peers to the biggest decline among 33 industry groups on the Topix. Smaller rival Kawasaki Kisen Kaisha Ltd. lost 1.1 percent to 373 yen. The Baltic Dry Index, a measure of shipping costs for commodities, retreated 1.3 percent, the first drop since Jan. 5.

Nikkei futures expiring in March added 0.8 percent to 8,100 in Osaka and gained 0.9 percent to 8,100 in Singapore.

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