Japan Stocks Rebound on U.S. Recovery Optimism, Resource Prices

By Masaki Kondo

Feb. 4 (Bloomberg) -- Japanese stocks rallied from a three- day drop as an unexpected gain in U.S. home resales sparked optimism a recovery in the global economy will prompt greater demand for materials.

Sumitomo Metal Mining Co., Japan’s No. 2 copper producer, leapt 10 percent after prices for the metal climbed and Credit Suisse Group AG raised its rating. Oil explorer Inpex Corp. jumped 7.3 percent after crude rose a second day. Honda Motor Co. soared 6.3 percent after the U.S. Senate approved a tax break plan for new car buyers. Mitsui O.S.K. Lines Ltd. rose 3.9 percent after commodity-shipping fees jumped for an 11th day.

“It’s about time investors prepared for a possible rebound in resources and shipping as the global economic slump bottoms out,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion. “These shares will be the first ones to climb up from the bottom.”

The Nikkei 225 Stock Average added 213.43, or 2.7 percent, to close at 8,038.94 in Tokyo. The broader Topix index rose 18.99, or 2.5 percent, to 792.78, with three stocks gaining for each that fell. Both gauges climbed for the first time since Jan. 29.

The Nikkei plunged by a record 42 percent last year and another 9.8 percent in January, the steepest monthly slump since October. The U.S., Japan and China are among countries seeking to revive their economies through interest-rate cuts, capital injections into banks and public spending.

The Nikkei’s members trade at an average 25.8 times estimated net income for this fiscal year, according to Nikkei Inc., the benchmark compiler. Stocks on the Standard & Poor’s 500 Index in the U.S. trade at 12.8 times projected profit.

Home Sales

The U.S. index of pending home resales climbed 6.3 percent in December from the previous month, the first advance since August, the National Association of Realtors said yesterday. Economists had estimated the index would be unchanged.

The home sales data and a Xinhua News Agency report that China started investing the second part of a stimulus package helped push prices for commodities higher. Copper futures for March delivery added 6.4 percent yesterday, the most in a week, while crude oil rose for a second day.

Sumitomo Metal leapt 10 percent to 935 yen, the highest close since Jan. 9. Credit Suisse boosted its rating on the stock to “outperform” from “neutral,” saying the worsening of its earnings has been already priced in.

Inpex, Japan’s No. 1 oil explorer, surged 7.3 percent to 717,000 yen, sending a gauge of mining shares to the steepest advance among 33 industry groups on the Topix. Closest domestic rival Japan Petroleum Exploration Co. rose 7.7 percent to 4,600 yen.

Budding Optimism

“Optimism the global economy will bottom out is growing, as authorities worldwide are rapidly bringing out a slew of stimulus measures,” said Takanori Miyajima, a fund manager at the investment-management affiliate of Tokai Tokyo Securities Co.

Honda, Japan’s second-biggest automaker, leapt 6.3 percent to 2,190 yen, and Toyota Motor Corp. surged 4.5 percent to 3,010 yen. The U.S. Senate approved an amendment to its stimulus plan draft that allows some new car buyers to deduct sales taxes and interest payments on auto loans from their tax bills.

Mitsui O.S.K., Japan’s No. 2 shipping company, added 3.9 percent to 607 yen, while smaller rival Kawasaki Kisen Kaisha Ltd. advanced 4 percent to 367 yen. The Baltic Dry Index, a measure of shipping costs for commodities, jumped 4.5 percent yesterday, extending its best start to a year since at least 1986, on demand for hauling iron ore to China.

Nikkei futures expiring in March added 3.1 percent to 8,010 in Osaka and gained 2.8 percent to 8,000 in Singapore.

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