Japan Stocks Rise on U.S. Rate Outlook; Kawasaki Heavy Advances

By Masaki Kondo

Aug. 13 (Bloomberg) -- Japanese stocks rebounded from their biggest decline in a month yesterday after the U.S. Federal Reserve said it will keep its benchmark interest rate low.

Honda Motor Co., which gets almost half its sales in North America, climbed 1.3 percent. Toray Industries Inc. gained 6 percent after the Nikkei newspaper said it developed an insulin nasal spray. Kawasaki Heavy Industries Ltd., which makes bullet trains, jumped 6.9 percent after the Nikkei separately reported that Vietnam will use Japan’s high-speed-train technology.

The Nikkei 225 Stock Average added 82.19, or 0.8 percent, to close at 10,517.19 in Tokyo. The broader Topix index rose 8.54, or 0.9 percent, to 968.41, with seven stocks gaining for every two that fell. Yesterday, both gauges dropped the most in a month.

“The Fed’s commitment to a low interest rate eased concern higher borrowing costs will hamper the U.S. economic recovery,” said Mitsushige Akino, who oversees the equivalent of $624 million at Ichiyoshi Investment Management Co. “Some players such as individuals are continuing to buy and sell stocks based on a short-term view, but big investors probably won’t shift serious money invested with a long-term strategy.”

The Nikkei has risen 49 percent since a more than quarter- century low on March 10, keeping its estimated price-earnings ratio at the highest level among benchmark indexes of the world’s biggest equity markets, according to data compiled by Bloomberg. At the same time, the number of shares traded on the main board of the Tokyo Stock Exchange has held below this year’s daily average for more than a week.

Low Interest Rates

In New York, the Standard & Poor’s 500 Index rebounded 1.2 percent yesterday from its biggest decline in a month the day before. The Fed said the benchmark interest rate will stay “exceptionally low” for an “extended period” and said the recession is easing. The Fed’s Open Market Committee left the rate between zero and 0.25 percent after its two-day meeting.

Toyota Motor Corp., the world’s biggest automaker, rose 1.5 percent to 4,090 yen, while smaller rival Honda Motor Co. advanced 1.3 percent to 3,080 yen. Denso Corp., a car-parts maker affiliated with Toyota, gained 3.4 percent to 2,875 yen after Mitsubishi UFJ Financial Group Inc. lifted the stock to “strong outperform” from “market perform.”

Kawasaki Heavy climbed 6.9 percent to 263 yen, the steepest increase in the Nikkei. Nippon Sharyo Ltd., a maker of train cars, gained 8.9 percent to 652 yen. Kinki Sharyo Co. added 8.7 percent to 913 yen.

Bullet Trains

Vietnam Railways Corp. will use Japan’s bullet-train technology for a planned $56 billion link connecting Hanoi and Ho Chi Minh City, the Nikkei newspaper reported, citing an interview with Chief Executive Officer Nguyen Huu Bang. The Vietnamese government aims to build the line in sections and start running high-speed trains by 2020, the report said.

Toray rallied 6 percent to 568 yen, the highest close since Sept. 19. Toray and Japan’s Hoshi University developed an insulin spray for treating diabetes, the Nikkei said. A team of researchers plans to tie up with a drugmaker to begin clinical trials of the treatment, the Nikkei reported, without saying where it obtained the information.

T&D Holdings Inc., Japan’s largest listed life insurer, sank 1.6 percent to 3,070 yen, sending a gauge of insurers to the biggest decline among the Topix’s 33 industry groups. Pretax profit dropped by a fifth in the quarter to June 30 as proceeds from sales of securities holdings inflated income a year earlier, the company said.

Nikkei futures expiring in September added 1 percent to 10,540 in Osaka and gained 1.1 percent to 10,540 in Singapore.

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