Japan Stocks Advance on Recovery Indicators; Toyota Set to Rise

By Masaki Kondo

April 2 (Bloomberg) -- Japanese stocks rose for a second day as better-than-expected indicators in the U.S. stoked speculation the world’s biggest economy is recovering.

Mitsubishi Motors Corp. climbed 2.3 percent after the U.S. Institute for Supply Management’s manufacturing gauge rose for a third month. Toyota Motor Corp., the world’s largest automaker, was set to rise on its narrower-than-estimated decline in U.S. sales. Mizuho Trust & Banking Co. climbed 2.1 percent after U.S. Treasury Secretary Timothy Geithner said there are “encouraging signs” in the financial market.

The Nikkei 225 Stock Average climbed 107.16, or 1.3 percent, to 8,459.07 as of 9:03 a.m. in Tokyo. The broader Topix index rose 9.65, or 1.2 percent, to 803.47.

“People have started to shrug off negative factors and focus on signs of recovery,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television. “The ISM index has a high correlation with Japan’s factory output, and the gauge’s improvement points to less severe sales drop for Japanese manufacturers.”

The Nikkei climbed 7.2 percent in March, narrowing this year’s loss to 5.7 percent, as confidence grew in central banks’ efforts to stem a shortage of credit. Still, two-thirds of the Nikkei’s members trade at below their corporate net worth, according to Bloomberg data.

The Standard & Poor’s 500 Index climbed in New York, bringing its two-day advance to 3 percent. The Institute for Supply Management yesterday said its factory index increased to 36.3 last month from 35.8 in February. A gauge of U.S. pending home resales rose 2.1 percent in February from January, the National Association of Realtors said. Economists had estimated the index would be unchanged.

‘Encouraging Signs’

“You’re seeing encouraging signs of improvement in our markets,” Geithner said yesterday in a Bloomberg Television interview. He accompanied President Barack Obama to London for Group of 20 meetings.

Toyota posted a 39 percent drop in U.S. sales last month, narrower than an estimated 41 percent tumble. Sales at Honda Motor Co. and Nissan Motor Co. fell 36 percent and 38 percent respectively, whereas analysts had projected a 42 percent slump for both companies.

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