Bloomberg News

Nikkei Gains for Fourth Day as U.S. Reports Boost Confidence

June 10, 2011

June 10 (Bloomberg) -- The Nikkei 225 Stock Average gained for a fourth day as reports in the U.S. suggested that the recovery in the world’s biggest economy is still on track.

Toyota Motor Corp., the No. 1 carmaker by sales, climbed 0.9 percent ahead of the automaker’s earnings forecast today. Tokio Marine Holdings Inc., a casualty insurer, gained 1.5 percent after the Nikkei newspaper reported it will buy a stake in a California-based insurer. Japan Petroleum Exploration Co., an oil driller, jumped 2.6 percent after crude traded near the highest this month. Takeda Pharmaceutical Co., a drugmaker, sank 2.9 percent after France suspended the sale of its best selling medicine, citing cancer risk.

“The pace of the U.S. recovery has slowed, but it’s not so bad that it’s going to fall into recession,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ?Asset Management Co., which oversees the equivalent of $84 billion. “Consumer spending is relatively solid and even though sentiment isn’t strong, it’s improving.”

The Nikkei 225 Stock Average rose 0.5 percent to 9,514.44 as of the 3 p.m. close in Tokyo. The gauge rose 0.2 percent for the week, snapping four consecutive weeks of losses.

The broader Topix increased 0.5 percent to 817.38. The Topix has tumbled 12 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, damaging nuclear plants, disrupting supply chains, and leaving almost 24,000 people dead or missing.

Consumer Comfort

The Standard & Poor’s 500 Index gained 0.7 percent in New York yesterday, rising for the first day in seven, after a report showed that the U.S. trade deficit unexpectedly narrowed in April, reflecting a plunge in oil imports combined with record exports. Commerce Department figures showed yesterday the gap shrank 6.7 percent to $43.7 billion in April, the lowest since December.

A separate report showed that consumer confidence rose last week for the third consecutive time as lower gasoline prices lifted Americans’ outlook on their finances. The Bloomberg Consumer Comfort Index climbed to minus 45.9 in the period to June 5, the best showing since the end of April, from the prior week’s minus 47.1. Across income groups, sentiment improved the most among people making less than $50,000 a year. A reading of minus 100 indicates every respondent held a negative view and a reading of zero means sentiment is evenly split.

Carmakers Gain

Automakers were the biggest contributors to the Topix’s gain among its 33 industry groups ahead of Toyota’s announcement of its fiscal year earnings forecast for the 12 months ending March 2012 today. Daiwa Securities Group Inc. also maintained a sector rating of “buy.”

Toyota gained 0.9 percent to 3,300 yen. Honda Motor Co., a carmaker that get more than 80 percent of its sales abroad, rose 0.9 percent to 2,985 yen.

“Toyota’s plan to release earnings forecasts has investors thinking that the supply chain is recovering more quickly than people expected,” said Toshihiko Matsuno, an analyst at SMBC Friend Securities Co.’s investment advisory department.

Toyota forecast full-year profit that fell short of analyst estimates as declining sales from a loss in output and a stronger yen eroded earnings. Net income may decline to 280 billion yen ($3.5 billion) in the 12 months ending in March, from 408.1 billion yen a year earlier, the automaker said in a statement after the market closed today. That compares with the 421.8 billion yen average of 13 analyst estimates compiled by Bloomberg in the past 28 days.

Oil Prices Advance

Oil companies had the biggest gain in the Topix among its 33 industry groups. Japan Petroleum jumped 2.6 percent to 3,900 yen and its bigger rival Inpex Corp. rose 1.9 percent to 588,000 yen. Crude oil for July delivery yesterday rose 1.2 percent to the highest settlement since May 31 in New York, after OPEC failed to reach an accord on output targets for the first time in at least 20 years. Ministers from the 12-nation Organization of Petroleum Exporting Countries were unable to come to agreement in five hours of talks in Vienna yesterday.

Kawasaki Heavy Industries Ltd., which makes turbine generators, pumps, and industrial robots, jumped 4.3 percent to 293 yen after Bank of America Merrill Lynch raised the company’s investment rating to “buy” from “neutral,” saying in a Japanese-language report dated yesterday “increasing demand for emergency-use and in-house power generations is a tail wind for the company.”

Tokio Marine climbed 1.5 percent to 2,189 yen, after the Nikkei reported the casualty insurer plans to pay 3.2 billion yen for 49 percent of WNC Holdings, a U.S.-based insurer of mortgages.

Takeda sank 2.9 percent to 3,665 yen, the biggest drop in the Nikkei 225. A French regulator said doctors should no longer prescribe Actos, Takeda’s best selling drug, following a study that showed the medicine carried a slightly increased risk of bladder cancer.

--With assistance from Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, Nick Gentle.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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


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