Japan Stocks Advance on Sony Forecast, Bank Borrowing Costs

By Masaki Kondo

May 15 (Bloomberg) -- Japanese stocks climbed, paring a decline on the week, after Sony Corp. forecast a smaller loss than analysts had expected and borrowing costs for banks dropped the most in eight weeks.

Sony, the world’s No. 2 electronics maker, jumped 7.1 percent after saying it will more close factories as part of its restructuring. Sumitomo Mitsui Financial Group Inc. added 6.8 percent as the London Interbank Offer Rate fell three basis points, the most since March 19. Mitsui O.S.K. Lines Ltd., Japan’s second-largest shipping line, advanced 2.7 percent as commodity-shipping fees rose to a seven-month high.

“Optimism lifts the market, and the gain in equities further lifts optimism,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $61 billion in Tokyo. “Like a drunkard waking up with a hangover, investors will eventually be hit with the reality that things haven’t improved overnight.”

The Nikkei 225 Stock Average climbed 171.29, or 1.9 percent, to close at 9,265.02 in Tokyo. The broader Topix index rose 18.99, or 2.2 percent, to 881.65. For the week, the Nikkei lost 1.8 percent, while the Topix declined 1.5 percent.

The Topix has risen 26 percent from a 25-year low on March 12 on signs government and central bank efforts to ease the global recession are taking effect. Orders for Japanese machinery, which unexpectedly gained in February, dropped 1.3 percent in March from the previous month, the Cabinet Office said today. Economists had predicted a 4.6 percent decline.

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