Bloomberg News

Japan Stocks Cap Longest Winning Streak in 2 Years on Economy

July 06, 2011

July 6 (Bloomberg) -- Japanese stocks advanced for a seventh day, with the benchmark index completing its longest winning streak in two years, as exporters and banks climbed amid easing concern over Europe’s debt crisis and reports signaled stronger economic recoveries at home and in the U.S.

Nippon Paper Group Inc. led increases by producers of cardboard and pulp, rising 5.2 percent today, after saying it will increase prices. Japan Petroleum Exploration Co., the country’s second-biggest oil driller by sales, gained 3.8 percent after crude prices rose. Nintendo Co. rose 3.1 percent after a report the game maker is expanding into smartphone games.

The Nikkei 225 Stock Average gained 1.1 percent to 10,082.48 at the 3 p.m. close in Tokyo. The gauge has advanced 5.3 percent in the past seven days, reaching its highest level since March 11, the day an earthquake and tsunami devastated Japan’s northeast coast. Shares rose as factory production rebounded in May and a report showed companies plan to increase investment in plant and equipment at almost twice the estimated rate this year.

“Japanese stocks that are sensitive to the global economy are picking up and the fact that they’ve beaten May highs shows they’re starting to get over the effects of the earthquake disaster,” said Nobuyuki Kashiwabara, a fund manager at Mizuho Asset Management Co. “There’s less and less worry about a double-dip recession in the U.S.”

Markets from Tokyo to New York advanced last week after a report showed U.S. manufacturing unexpectedly expanded in June. The gain in the Institute for Supply Management’s factory index added to evidence global manufacturing is recovering from supply-chain disruptions following Japan’s March disaster.

Manufacturing Recovery

Stocks also gained in the past week as Greece qualified for more bailout money to help pay off bonds coming due this month and avert a default. The cash-strapped nation still needs more loans to help it survive through next year. A default could hurt European banks, which hold the country’s debt.

Japan’s Topix index, which includes a broad range of smaller companies not included on the exporter-heavy Nikkei, has climbed to within 11 percent of this year’s high on Feb. 21, after dropping as much as 21 percent following the quake. The gauge advanced 1 percent to 873.51 today.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The index slipped 0.1 percent yesterday, ending a five- day winning streak, after Moody’s Investors Service cut Portugal’s long-term government bond ratings to Ba2, or junk, from Baa1. Portugal is the second euro country rated non- investment grade by Moody’s, joining Greece.

U.S. Factory Orders

Japanese shares rose today after a report on U.S. factory orders suggested manufacturing in the world’s biggest economy is recovering from a slowdown. Orders increased 0.8 percent in May, helping to recover ground lost a month earlier when bookings fell 0.9 percent. Economists surveyed by Bloomberg predicted a 1 percent gain.

Papermakers had the biggest increase among the 33 Topix industry groups today after Nippon Paper said it will increase prices on printing paper by at least 10 percent to pass on higher fuel costs. Nippon Paper jumped 5.2 percent to 1,910 yen. Hokuetsu Kishu Paper Co. gained 4.9 percent to 518 yen, while Oji Paper Co. climbed 2.3 percent to 409 yen.

Energy-related shares gained as oil rose for a second day in New York on speculation crude inventories declined in the U.S. Futures for August delivery gained 0.9 percent today, after advancing 2.1 percent yesterday.

Japan Petroleum climbed 3.8 percent to 3,920 yen, while larger rival Inpex Corp. added 1.7 percent to 598,000 yen. Mitsui & Co., a trading house that counts commodities as its biggest source of profit, gained 2.2 percent to 1,440 yen. Mitsubishi Corp., Japan’s biggest commodities trader by revenue, rose 1.2 percent to 2,072 yen.

Nintendo climbed 3.1 percent to 15,900 yen. Shares advanced after CBS said on its Bnet.com. website that the company will release a Pokemon game for Apple Inc.’s iPhone later this summer. Nintendo spokesman Yasuhiro Minagawa denied the report, saying the game will be released by Pokemon Co., an independent company that is 32 percent owned by Nintendo.

--Editors: Jason Clenfield, Nick Gentle

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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


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