Bloomberg News

Japanese Stocks Advance After U.S. Retail Sales Beat Forecasts

June 15, 2011

June 15 (Bloomberg) -- Japan’s stocks gained for a second day after a report showed U.S. retail sales fell less than expected, easing concern the world’s biggest economy is slowing and boosting the outlook for Japanese exporters.

Nissan Motor Co., a carmaker that earns about a third of its revenue in North America, gained 0.8 percent. Hino Motors Ltd., a maker of buses and trucks, climbed 4.4 percent after it forecast a return to profit and said it restored production to normal levels on a parts-supply recovery. Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi nuclear plant, soared by its daily limit for a second day after the bourse clamped down on short-selling of the shares.

“Excessive concern about the future of the U.S. economy will recede because retail sales, the most important data showing U.S. personal spending, weren’t as bad as the market expected,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Investors will likely buy companies sensitive to the global economy.”

The Nikkei 225 Stock Average rose 0.3 percent to 9,574.32 at the 3 p.m. close in Tokyo, after earlier falling as much 0.3 percent. The broader Topix gained 0.2 percent to 824.65. The index has tumbled 11 percent since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years, disrupting supply chains, and leaving almost 24,000 people dead or missing.

Retail Sales

The Standard & Poor’s 500 Index gained 1.3 percent yesterday in New York, the most since April 20, after better- than-estimated data on American retail sales and Chinese industrial production.

The Commerce Department in Washington yesterday reported sales at retailers fell 0.2 percent in May, less than forecast, indicating American consumers are weathering higher gasoline costs. The median forecast of economists surveyed by Bloomberg News was for a drop of 0.5 percent. Another report showed U.S. wholesale costs rose last month.

Nissan gained 0.8 percent to 810 yen and Toyota Motor Corp., Japan’s largest company by sales, rose 0.6 percent to 3,250 yen. Honda Motor Co., the nation’s No. 2 carmaker by sales, added 2 percent to 2,990 yen after saying it plans to pay a full-year dividend of 60 yen per share, compared with 54 yen a year earlier. Honda yesterday forecast its net income may fall to 195 billion yen ($2.4 billion) this fiscal year from 534.1 billion yen a year ago.

Hino Restored

Hino Motors Ltd., a maker of buses and trucks, jumped 4.4 percent to 453 yen. The company restored production to normal levels at all of its plants in early June after a recovery in parts supply, according to a statement on the company’s website yesterday. Hino forecast net income of 12 billion yen this fiscal year, after a loss of 10 billion yen a year earlier, citing a recovery in demand for trucks and busses in Japan.

Power companies gained the most among the 33 Topix industry groups. Tokyo Electric soared by its upper daily-limit of 80 yen, or 32 percent, to 329 yen. The stock yesterday also climbed by its daily limit after the Cabinet said Japan will guarantee loans by banks to a third-party organization established to ensure the utility can compensate victims of the nuclear accident.

Tepco’s Surge

“Investors had been selling the utility because so much had been left up in the air for so long,” said Masaru Hamasaki, who helps oversee the equivalent of $18 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “The Cabinet’s action has helped people to return to the shares.”

Tepco, as the utility is known, also got a boost after the Tokyo Stock Exchange yesterday raised the collateral requirement for short sales of the shares to 50 percent from 30 percent. The move discouraged speculators by making the trade more expensive.

Kansai Electric Power Co. advanced 1.6 percent to 1,298 yen after Citigroup Inc. raised the utility’s investment rating to “buy” from “hold,” citing a likely resumption of nuclear power production at existing reactors as early as this month.

Among companies that dropped, Daikin Industries Ltd., a maker of air conditioning that gets almost 20 percent of its revenue from China, slid 1.3 percent to 2,885 yen. Toray Industries Inc., a fiber maker that earns almost 30 percent of its sales from China and other Asian countries, slid 0.2 percent to 600 yen.

China’s central bank yesterday increased banks’ reserve requirements to drain cash from the economy after consumer prices rose 5.5 percent in May, the biggest gain since 2008.

China’s stocks fell, dragging the benchmark index down the most in a week, amid speculation the central bank will take more steps to curb inflation, which banks from Societe Generale SA to UBS AG say may reach 6 percent this month.

“We got a positive surprise in U.S. data yesterday and that’s calmed the markets,” said Ayako Sera, a strategist at Sumitomo Trust & Banking Co. in Tokyo, which manages the equivalent of $306 billion. “At the same time, China raised bank reserve requirements, tightening the lending market.”

--Editors: Jason Clenfield, Sam Waite.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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


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