Japanese Stocks Rise on Commodities, U.S. Outlook; Nissan Jumps

November 05, 2010, 12:05 AM EDT By Akiko Ikeda

Nov. 5 (Bloomberg) -- Japanese stocks rose, sending the Topix index to its biggest gain in 11 months, as commodity prices increased and on speculation the U.S. Federal Reserve will succeed in stoking growth in the world’s biggest economy.

Mitsubishi Corp., Japan’s largest commodities trader, climbed 3.1 percent. JX Holdings Inc., Japan’s biggest oil refiner and copper producer, gained 2.3 percent. Nissan Motor Co., Japan’s No. 3 carmaker, surged 6.7 percent after boosting its profit forecast. Sumitomo Heavy Industries Ltd., a maker of heavy electric machinery, increased 4.6 percent on a higher profit outlook.

“The Fed sent a very clear message about overcoming deflation, and it did not disappoint the market, so that’s supporting stocks,” said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which oversees about $75 billion in Tokyo. “Gains in commodity prices on the back of the weakening dollar will continue for a while.”

The Topix gained 2.5 percent to 836.38, its biggest advance since Dec. 3. The Nikkei 225 Stock Average rose 2.9 percent to 9,632.58 as of 1:01 p.m. in Tokyo, the most among Asia-Pacific indexes. All 33 industry groups in the Topix advanced. For the week, the Nikkei has risen 4.4 percent while the Topix is up 3 percent.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The index jumped 1.9 percent yesterday, the most in a month, as investors speculated the Federal Reserve will succeed in stoking growth and that banks will raise dividends.

Bank of Japan

“With speculation of continuing excess liquidity, money is flowing into risk assets,” including stocks and commodities, said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Uncertainties about the global economic outlook are clearing.”

The Bank of Japan today kept its interest rate and the size of an asset-purchase fund unchanged and said it will buy Japanese real estate investment trusts with credit ratings of AA or higher and exchange-traded funds that track the Nikkei 225 Stock Average and the Topix index.

The Nikkei 225 has slumped 8.9 percent this year, the most among the world’s 15 largest equity markets. Today’s advance boosted the average price of stocks in the gauge to 17 times estimated earnings, the highest level in a month.

Metals, Oil Rise

Mitsubishi gained 3.1 percent to 2,088 yen. Mitsui & Co., which counts commodities as its largest source of profit, jumped 4.7 percent to 1,322 yen. JX Holdings advanced 2.3 percent to 494 yen. Inpex Corp., Japan’s largest oil explorer, increased 2.6 percent to 441,500 yen. Sumitomo Metal Mining Co., Japan’s largest gold producer, surged 5.2 percent to 1,368 yen.

Prices of oil and metals advanced as the Federal Reserve’s plans to buy more U.S. debt drove the dollar lower, boosting demand for commodities as alternative investments.

Crude oil for December delivery rose 2.1 percent in New York yesterday to $86.49 a barrel, the highest settlement price since April 6. Copper futures advanced 3.3 percent to a 28-month high. Gold futures surged to a record of $1,393.40. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum jumped 3.1 percent yesterday, the most since May.

Nissan leapt 6.7 percent to 769 yen, the second-largest increase in the Nikkei 225. The company boosted its forecast for full-year net income by 80 percent to 270 billion yen ($3.3 billion), more than the median estimate of 252 billion yen by 22 analysts surveyed by Bloomberg. Nomura Holdings Inc., Japan’s biggest brokerage, increased its share-price estimate on the carmaker to 1,100 yen from 990 yen.

Carmakers Lead Gains

Toyota Motor Corp., the world’s largest carmaker, advanced 1.9 percent to 2,966 yen and Honda Motor Co., Japan’s No. 2 carmaker, climbed 4.7 percent to 2,895 yen.

About four Japanese companies have exceeded profit estimates for every three that have fallen short, based on Bloomberg data compiled from about 770 companies in the Topix that have reported quarterly results since Oct. 7. About 360 companies of the index’s more than 1,650 are scheduled to announce earnings this week, according to Bloomberg data.

Sumitomo Heavy Industries jumped 4.6 percent to 501 yen, set for the highest close since July 30. The company raised its full-year net income outlook 21 percent to 20 billion yen, citing higher sales of construction machinery and cost cuts. It also increased its planned yearend dividend to 6 yen a share from 5 yen.

Mitsumi Electric Co., an electronic-component maker, soared 6.4 percent to 1,429 yen, the most since July 2009. The company narrowed its net loss forecast for the year ending in March to 1.5 billion yen from 3.7 billion yen.

Resona Holdings Inc., Japan’s fourth-largest bank by market value, plummeted by its daily limit of 100 yen, or 16 percent, to 512 yen, the biggest drop and lowest level since May 2003. The bank is preparing a public share offer of several hundred billion yen to hasten the repayment of government funds, according to two people with knowledge of the matter.

--With assistance from Kotaro Tsunetomi in Tokyo. Editors: Sam Waite, John McCluskey.