Japan’s Stocks Rebound on Lower Yen, Reducing Weekly Decline

By Masaki Kondo

Jan. 16 (Bloomberg) -- Japanese stocks rebounded, paring their steepest weekly decline in more than a month, as a weaker yen raised speculation company earnings will improve.

Honda Motor Co., which gets more than half its profit from North America, jumped 8 percent. Sumco Corp., the world’s second- largest maker of silicon wafers, surged 8.7 percent after Intel Corp. said it expects its customers to rebuild depleted inventories. T&D Holdings Inc., Japan’s biggest listed life insurer, advanced 7.1 percent after Macquarie Group Ltd. rated the stock to “outperform.”

“The yen’s decline spurred investors to snap up exporters’ shares,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees about $9.3 billion. “People in the market are weighing how deeply company earnings will slump in the current recession.”

The Nikkei rose 206.84, or 2.6 percent, to close at 8,230.15 in Tokyo. The broader Topix index added 21.90, or 2.8 percent, to 817.89, with almost six stocks advancing for each that slumped. Yesterday, both benchmarks fell to the lowest level since Dec. 5.

The gauges extended their gains in afternoon trading after the yen weakened to the day’s low and the U.S. government said it agreed to invest $20 billion more in Bank of America Corp. to prevent the financial crisis from deepening.

The Nikkei lost 6.9 percent this week, the most since the period ended Dec. 5, on concern companies from Sony Corp. to Toshiba Corp. will miss earnings’ forecasts and as a record decline in machinery orders pointed to a prolonged global recession. The Topix fell 4.3 percent.

Weakening Yen

Honda, Japan’s second-biggest automaker, rose 8 percent to 2,010 yen, while Sony, which gets a quarter of its sales from the U.S., added 4.8 percent to 2,075 yen. Denso Corp., an auto-parts affiliate of Toyota Motor Corp., climbed 8.1 percent to 1,654 yen after Mitsubishi UFJ Securities Co. raised its rating on the stock to “outperform” from “market perform.”

The yen weakened to as much as 90.57 against the dollar today from 88.97 at the close of stock trading in Tokyo yesterday. The dollar rose against the yen and euro after European Central Bank President Jean-Claude Trichet signaled he may cut interest rates again in March after the ECB reduced its benchmark rate yesterday by half a percentage point to 2 percent. A weaker yen boosts the value of overseas sales for Japanese companies.

Sumco soared 8.7 percent to 1,216 yen, and Shin-Etsu Chemical Co., a provider of semiconductor silicon, added 7.2 percent to 4,340 yen. Intel, the world’s top maker of semiconductors, yesterday said its margins may rebound after fourth-quarter net income dropped 90 percent as orders pick up from customers running low on inventories.

Insurers Rally

Tokyo Electron Ltd., the world’s second-largest maker of semiconductor equipment, climbed 8.5 percent to 3,120 yen. Nikon Corp., Japan’s largest maker of steppers used in semiconductor production, gained 6.7 percent to 1,073 yen. Intel’s spending on facilities will be little changed or slightly down from last year’s $5.2 billion, the company said.

T&D advanced 7.1 percent to 3,110 yen, while Sony Financial Holdings Inc. jumped 5 percent to 294,900 yen. Macquarie Group Ltd. yesterday started the coverage of both insurers with “outperform” ratings, saying the stocks were undervalued.

Nikkei futures expiring in March added 2.5 percent to 8,240 in Osaka and gained 2.7 percent to 8,240 in Singapore.

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