Japanese Stocks Head for Biggest Gain in Week as Commodity Producers Rise

By Kana Nishizawa - Oct 24, 2011 9:29 AM GMT+0700

Japanese stocks rose, with the benchmark Nikkei 225 (NKY) Stock Average set for its biggest gain in a week, as commodity producers climbed on higher oil and metal prices and exporters advanced after the country’s shipments increased more than expected.

Mitsubishi Corp. (8058), Japan’s biggest trading company by market value, rose 1.9 percent, while copper producer Sumitomo Metal Mining Co. increased 3.7 percent. Toyota Motor Corp. (7203), the world’s largest automaker by market value, advanced 1.1 percent after Japanese exports beat estimates. Bridgestone Corp. (5108) jumped 3.8 percent after the tiremaker said it’s planning a record investment in factories to meet demand from emerging markets.

“Commodity prices have stopped falling and that’s removed one of the heaviest drags on sentiment,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees more than $100 billion.

The Nikkei 225 rose 1.4 percent to 8,798.81 at the 11 a.m. trading break in Tokyo, set for its largest advance since Oct. 17. The broader Topix index increased 1 percent to 751.28 after European leaders outlined plans to aid banks during a summit in Brussels yesterday, boosting confidence the region will contain the Greece-fueled debt crisis.

The Topix has tumbled 17 percent this year though Oct. 21 amid concern U.S. growth is slowing and Europe’s debt crisis will damage the banking system. The decline has cut the price of shares on the index to 0.89 times estimated book value at the last close, near the lowest since March 2009

S&P Futures

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today after officials ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund. The gauge climbed 1.9 percent on Oct. 21, capping its longest weekly rally since February, as European governments considered deploying $1.3 trillion in funds to tame the debt crisis.

Mitsubishi rose 1.9 percent to 1,506 yen. Marubeni Corp. (8002), a trading company that deals in iron and steel, gained 2.7 percent to 424 yen. Sumitomo Metal Mining jumped 3.7 percent to 1,044 yen. Inpex Corp. (1605), Japan’s leading oil explorer by market value, advanced 2.6 percent to 516,000 yen.

Crude oil futures rose 1.6 percent in New York on Oct. 21, while the London Metal Exchange Index of prices for six metals, including copper and aluminum gained 4.7 percent. Oil and copper futures gained today before European leaders meet on Oct. 26 to agree on a blueprint to tackle the region’s sovereign debt crisis.

“The mood is generally optimistic that euro-zone policy makers will announce significant measures to bolster the bailout fund and resolve Greece’s debt crisis, while also supporting the region’s banks,” said Stan Shamu, a strategist at IG Markets in Melbourne.

Toyota rose 1.1 percent to 2,574 yen. Honda Motor Co., Japan’s second-largest automaker by market value, advanced 1.7 percent to 2,335 yen. Toshiba Corp. (6502), a maker of electrical products that gets more than half of its revenue outside Japan, increased 1.2 percent to 344 yen.

Japan’s exports increased more than expected in September, a sign the recovery in shipments is withstanding a weakening global economy. Shipments rose 2.4 percent last month from a year earlier, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg was for a 1 percent increase.

Bridgestone jumped 3.8 percent to 1,759 yen. The company plans to build a factory in the U.S. to produce aircraft tires and increase manufacturing capacity in China, Chief Financial Officer Akihiro Eto said on Oct. 21. Emerging markets are expected to make up 30 percent of Bridgestone’s fuel-efficient tire sales by 2016 from less than 20 percent now, he said. The company aims to boost overall annual sales to 3.6 trillion yen by 2012, Eto added.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.