Japan Shares Climb, Led by Train, Drug Companies; Shippers Drop

By Masaki Kondo

April 28 (Bloomberg) -- Japanese stocks rose, led by train and drug companies after East Japan Railway Co. announced a share buyback and governments raised threat levels for swine flu. Shipping lines extended declines as commodity cargo fees fell.

East Japan Railway, the nation’s biggest train operator, climbed 5.5 percent. Chugai Pharmaceutical Co., which sells the antiviral drug Tamiflu, surged 4.9 percent as the World Health Organization stepped up efforts to curb the spread of swine flu. Nippon Yusen K.K., Japan’s No. 1 shipping company, lost 4.7 percent, adding to yesterday’s drop when it said net income would slump 68 percent this year.

The Nikkei 225 Stock Average rose 60.99, or 0.7 percent, to 8,787.33 as of 9:56 a.m. in Tokyo, reversing an early dip. The broader Topix index climbed 4.21, or 0.5 percent, to 837.31, with three stocks advancing for each that retreated.

“People are weighing whether the global economy will start recovering in the second half of this year,” Fumikazu Onishi, a Tokyo-based senior strategist at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. “Investors are reluctant to buy until they assess company earnings and forecasts.”

The Nikkei has gained 7.6 percent since the end of March through yesterday, set for the best monthly performance in a year. Two-thirds of the gauge’s members are expected to provide higher dividend yields than the 1.45 percent return on 10-year government bonds, according to Bloomberg data.

East Japan Railway surged 5.5 percent to 5,390 yen, even after forecasting a 29 percent drop in net income for this fiscal year. The company yesterday said it will buy back up to 1 percent of its outstanding shares. Keisei Electric Railway Co. added 2.4 percent to 468 yen.

Swine Flu

Chugai, the Japanese seller of Roche Holding AG’s Tamiflu drug, leapt 4.9 percent to 1,936 yen, adding to yesterday’s 14 percent surge. The WHO raised its pandemic alert level for swine flu to the highest level since the warning system was adopted in 2005. Swine flu cases in the U.S. doubled to 40, and Mexico’s toll of flu-related deaths reached 149.

Nippon Yusen lost 4.7 percent to 403 yen, while Mitsui O.S.K. Lines Ltd., Japan’s No. 2 bulk shipper, fell 3.7 percent to 566 yen. Kawasaki Kisen Kaisha Ltd., the third biggest, retreated 4.4 percent to 369 yen.

The Baltic Dry Index, a measure of commodity-shipping costs, slipped 1.8 percent in London, the most since April 3. The three companies projected yesterday earnings would fall as much as 80 percent in fiscal 2009.

Nikkei futures expiring in June edged up 0.6 percent to 8,800 in Osaka and gained 0.7 percent to 8,795 in Singapore.

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