Japan’s Nikkei 225 Gains on U.S. Mortgage Aid; Pioneer Plunges

By Patrick Rial

Feb. 13 (Bloomberg) -- Japan’s Nikkei 225 Stock Average rose, paring a weekly drop, on a report U.S. President Barack Obama’s administration will provide relief for homeowners and as retail sales in the world’s biggest economy unexpectedly increased.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest listed lender, rose 1.3 percent after a person briefed on the matter said the Obama administration is preparing a plan to lower mortgage rates. Hitachi Ltd. surged 4.2 percent after the U.K. said the company and its partners are the preferred group to win a $10.7 billion train contract. Pioneer Corp. plunged 17 percent after the electronics maker widened its annual loss forecast.

The Nikkei 225 rose 49.83, or 0.7 percent, to 7,755.19 as of 9:35 a.m. in Tokyo. The broader Topix index climbed 0.93, or 0.1 percent, to 761.22. In New York, the Standard & Poor’s 500 Index staged a late rally, erasing a 3.1 percent loss to gain 0.2 percent.

“The outlook for a dose of relief for U.S. homeowners helped markets there stage a rebound, while economic data was fairly positive as well,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages $53 billion, said in an interview with Bloomberg Television. “The market here has been beaten down recently and is due for a bounce.”

For the week, the Nikkei has retreated 3.9 percent, while the Topix has lost 3.6 percent, bringing it near the lowest level in 23 years. The Nikkei has fallen 12 percent this year, building on a record 2008 slump as the world’s largest economies slipped into recession.

Mortgage Aid

Mitsubishi UFJ, which has announced $1.8 billion in writedowns and credit losses since he start of the subprime housing crisis, rose 1.3 percent to 474 yen. Canon Inc., which generates about 30 percent of its sales in the U.S., added 0.4 percent to 2,415 yen.

The U.S. government will subsidize interest-rate reductions by working with servicers that handle mortgages, a person with knowledge of the plan said. Sales at U.S. retailers unexpectedly climbed 1 percent in January, halting a six-month slide. The gain reflected higher gasoline prices and more spending on clothing and food, the Commerce Department said.

Hitachi rallied 4.2 percent to 271 yen. The U.K. Department for Transport named Agility Trains, a group which includes John Laing Plc, Hitachi and Barclays Plc, as the preferred bidder for a 7.5 billion-pound ($10.7 billion) contract to build a fleet of Super Express trains, replacing existing stock. Hitachi said it plans to construct a manufacturing site in the U.K.

Pioneer, which introduced the first DVD players in 1996, plunged 17 percent to 149 yen, the lowest since at least 1974. The electronics maker said yesterday it will fire 10,000 workers and close its television operations as losses this year are expected to climb to a record 130 billion yen ($1.44 billion).

Shipping Companies

At least 130,000 job cuts have been announced by listed Japanese companies in the past six months as the global recession has pummeled the nation’s capital goods and export-oriented manufacturers.

Shipping companies tumbled after freight charges retreated for the first time in 18 days and UBS AG lowered its recommendations on the Japan’s three largest marine carriers. Nippon Yusen K.K., Japan’s No. 1 shipping line operator by sales, slumped 4.8 percent to 435 yen. Mitsui O.S.K. Lines Ltd., the second biggest, fell 4.3 percent to 552 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, declined 5.3 percent to 343 yen.

The Baltic Dry Index, a measure of shipping costs for commodities, lost 3.2 percent after more than doubling in the last month. Jun Harada, a Tokyo-based analyst at UBS, cut his recommendation on the three companies to “neutral” from “buy,” citing weaker-than-expected cargo movement.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.