Japanese Stocks Climb on Chipmaker Merger Talks, Fed Report

By Patrick Rial

April 16 (Bloomberg) -- Japanese stocks climbed on speculation consolidation will boost profitability in the computer chip industry and after a U.S. Federal Reserve survey showed economic contraction eased in some regions.

Mitsubishi Electric Corp. jumped 4.8 percent after its Renesas Technology Corp. affiliate was said to be in merger talks with NEC Electronics Corp., Japan’s third-biggest chipmaker. Nissan Motor Co., the nation’s No. 3 carmaker, rose 3.4 percent as almost half of the regions surveyed in the Fed’s Beige Book said there’s been a “moderation” in economic decline. Steelmakers and shipping lines gained ahead of reports from China on gross domestic product, production and inflation.

The Nikkei 225 Stock Average rose 258.59, or 3 percent, to 9,001.55 as of 10:21 a.m. in Tokyo, snapping a three-day slide. The broader Topix index gained 18.61, or 2.2 percent, to 853.86.

“It’s natural when the economy turns south to see these kinds of mergers as a strategy for survival. Making money in semiconductors is difficult in any business climate,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion. “We aren’t on the path to a legitimate recovery, but we are seeing signs that sentiment is improving.”

The Nikkei has rallied by more than a quarter from a 26- year low on March 10. Shares in the gauge trade at an average of 183 times estimated net income for this year, up from 14 times a year ago, according to index compiler Nikkei Inc.

Merger Talks

Mitsubishi Electric, owner of 45 percent of Renesas, advanced 4.4 percent to 525 yen. Hitachi Ltd., which holds the rest of Renesas, rose 2.2 percent to 320 yen. NEC Electronics was poised to climb by its 100 yen trading limit, or 12 percent, to 930 yen. Its majority stakeholder NEC Corp. rallied 4.7 percent to 310 yen.

A merger with Renesas is among options being considered by NEC Electronics to improve its competitiveness, Shino Inokuma, a spokeswoman for NEC Electronics, said by telephone today. Inokuma was responding to a Nikkei newspaper report that NEC Electronics and Renesas seek to reach an agreement this month and merge by April 2010. The combination would create Japan’s biggest chipmaker with annual sales of more than 1.2 trillion yen ($12 billion), Nikkei said.

Nissan gained 4.3 percent to 485 yen. Honda Motor Co., Japan’s second-largest automaker, rose 2.8 percent to 2,800 yen. Sony Corp., the world’s second-largest maker of consumer electronics, climbed 2.9 percent to 2,515 yen.

Beige Book

Five of 12 Fed district banks “noted a moderation in the pace of decline,” the U.S. central bank said yesterday in its Beige Book business survey, published two weeks before officials meet in Washington to set monetary policy. Retail sales showed a “slight improvement” in some regions, and there was a “scattered pickup” in home buying.

“The Beige Book gave some indication that the deterioration of the U.S. economy is easing and shows that there is some positive macroeconomic news starting to emerge,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television.

JFE Holdings Inc., the world’s third-biggest steelmaker by output, jumped 5.5 percent to 2,765 yen. Pacific Metals Co., which produces nickel used for steel, rallied 10 percent to 635 yen. Nippon Yusen K.K., Japan’s largest shipping line, rose 6.8 percent to 477 yen.

China is scheduled to release data at 11 a.m. on gross domestic product for the first quarter, consumer price inflation, industrial production and retail sales. The economy probably expanded at a 6.2 percent pace in the first quarter, according to economists’ estimates.

Aderans Holdings Inc., Japan’s biggest wigmaker, was bid higher by the daily limit of 100 yen, or 11 percent to 1,045. Unison Capital Inc. plans to launch a tender offer for at least 33.4 percent of the company’s shares, the Nikkei newspaper said. The tender price is expected to be around 1,000 yen per share, according to the report.

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