Japan Stocks Rise as Yen Falls on Expectations for BOJ Policy

By Akiko Ikeda and Anna Kitanaka

Dec. 1 (Bloomberg) -- Japanese stocks rose, erasing declines from the morning session, after the announcement of a central bank emergency meeting raised speculation it will enact measures to limit the yen’s gains.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest listed bank, climbed 3.1 percent on speculation any new BOJ policy would stimulate lending. Nomura Holdings Inc., Japan’s largest brokerage, advanced 4 percent. Honda Motor Co., a carmaker that gets 85 percent of revenue abroad, rose 3.9 percent. The yen depreciated to as much as 87.52 to the dollar after the BOJ’s announcement, the weakest since Nov. 24. The central bank said after stock markets closed that it will provide short-term loans to commercial banks, causing the yen to pare losses.

“Unless something else comes out, the equity market might be a bit disappointed,” John Vail, head of global strategy in Tokyo at Nikko Asset Management Co., which manages $93 billion in assets globally, said in a telephone interview.

The Nikkei 225 Stock Average jumped 2.4 percent to 9,572.20 at the market close in Tokyo, rebounding from a 1.2 percent drop in morning trading. The broader Topix index gained 2.1 percent to 857.76 with about seven stocks rising for each that fell.

The Nikkei lost 6.9 percent in November, as the strengthening yen threatened to hurt the value of export earnings. It was the gauge’s steepest monthly decline since January. The MSCI World Index of 1,654 stocks gained 3.9 percent for the month, while the Standard & Poor’s 500 index climbed 5.7 percent. The yen traded at an average rate of 89.15 against the dollar in November compared with an average of 93.92 this year.

BOJ Meeting

The central bank’s plan to set aside 10 trillion yen for three-month loans came after a Kyodo News report that cited bank Governor Masaaki Shirakawa as saying the bank’s board will consider implementing monetary easing. Finance Minister Hirohisa Fujii said before the meeting that so-called quantitative easing policies to add cash to the economy would help a recovery.

Mitsubishi UFJ added 3.1 percent to 497 yen and was the most active stock by value on the Nikkei and the Topix. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, rose 1.6 percent to 2,895 yen from an earlier slump of 3.7 percent.

Mizuho Financial Group Inc., No. 3, advanced 1.9 percent to 165 yen. A gauge of bank shares has fallen 17 percent this year, compared with the Topix index’s 0.2 percent drop.

Nomura Holdings

Measures for consumer lenders and securities companies both gained 4.3 percent today, after having fallen this year by 16 percent and 4.5 percent respectively. Nomura Holdings gained 4 percent to 647 yen while Daiwa Securities Group Inc., Japan’s No. 2 brokerage, leapt 4.7 percent to 487 yen.

“Industries with a lot of debt and industries that have fallen such as financials and exporters should rebound,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees the equivalent of $96 billion.

Carmakers rallied after the yen weakened. Honda advanced 3.9 percent to 2,805 yen and was the second-largest contributor to the Nikkei’s gain. Mazda Motor Corp., which earns 75 percent of its sales from overseas, jumped 5.4 percent to 194 yen. Toyota Motor Corp. rose 2.3 percent to 3,520 yen.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.