Japan Stocks Rise on U.S. Confidence, Home Prices; Noritz Jumps

By Masaki Kondo

Aug. 26 (Bloomberg) -- Japanese stocks rose after U.S. consumer confidence gained and American home prices dropped less than estimated.

Toyota Motor Corp., a carmaker that generates 30 percent of sales in North America, added 1.5 percent. Orix Corp., Japan’s largest non-bank financial company, advanced 3.2 percent after the Nikkei newspaper said it will invest in a real-estate fund. Noritz Corp., which makes water heaters, soared 9.2 percent after Credit Suisse Group AG said the party favored to win elections this weekend will seek to require people to replace old boilers.

“The market is sandwiched between the U.S. economy’s recovery from the housing recession and concern that current stock prices are too high,” said Hiroshi Morikawa, a senior strategist at Tokyo-based MU Investments Co., which manages the equivalent of $13 billion.

The Nikkei 225 Stock Average increased 1.4 percent to 10,643.99 as of 1:04 p.m. in Tokyo. The broader Topix index rose 1.2 percent to 976.51, with five times as many stocks gaining as declining.

The Nikkei’s 49 percent rally from a more than quarter- century low on March 10 has boosted its estimated price-earnings ratio to 45.6 times. That’s the highest the level among the gauges of the world’s five biggest markets including the U.S. and China, data compiled by Bloomberg show.

From Ocean Trench

In New York, the Standard & Poor’s 500 Index added 0.2 percent yesterday after rising as much as 1.2 percent. The Conference Board’s consumer-confidence index climbed in August for the first time in three months. The S&P/Case-Shiller home- price index declined 15.4 percent in June from a year earlier, less than estimated by economists.

Toyota, the world’s biggest automaker, advanced 1.5 percent to 4,110 yen, while closest domestic rival Honda Motor Co. rose 1 percent to 3,020 yen. Panasonic Corp., the world’s largest maker of plasma televisions, added 1.4 percent to 1,502 yen Makers of electronics and cars contributed the most to the Topix’s gain.

“Production is rebounding as if it’s starting to emerge from a deep ocean trench, but it’s still on the sea bottom thousands of meters below the surface,” said MU’s Morikawa. “With companies having to dispose of manufacturing equipment, falling investment and job cuts will continue to weigh on the global economy for a long time.”

Toyota said today it will shut down one of its assembly lines next year to cope with slowing demand. The company cut its domestic production almost in half through June.

Boiler Makers

Orix climbed 3.2 percent to 6,740 yen. Sumitomo Realty & Development Co., Japan’s No. 3 property developer, added 3.1 percent to 1,998 yen. Daikyo Inc., which builds and sells condominiums, soared 6.7 percent to 238 yen, set for the highest close since May 2008.

About 40 companies, including Orix, will invest 30 billion yen ($319 million) in a public-private fund to be set up next month, the Nikkei said today. The fund will finance real-estate investment trusts to ease the credit crisis, the newspaper said.

Noritz soared 9.2 percent to 1,288 yen, en route for the steepest leap since Oct. 14. Rival Rinnai Corp. gained 3.4 percent to 4,620 yen. Polls show the opposition Democratic Party of Japan, or DPJ, is favored to win parliamentary elections. The ruling Liberal Democratic Party has governed Japan for all but 10 months since 1955.

“A DPJ victory could focus attention on water-heater makers such as Rinnai and Noritz in the short term,” Credit Suisse analysts Yoji Otani and Masahiro Mochizuki, wrote in a report yesterday.

Nikkei futures expiring in September added 1.1 percent to 10,620 in Osaka and gained 1.2 percent to 10,625 in Singapore.

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