Bloomberg News

Japan Stocks Rise on Speculation Germany to Expand Rescue Fund

September 29, 2011

Sept. 29 (Bloomberg) -- Japanese stocks rose for a third day as Mitsubishi UFJ Financial Group Inc. and other lenders advanced on speculation German lawmakers will vote to expand a bailout fund that may help Europe resolve its debt-crisis.

Mitsubishi UFJ, Japan’s biggest publicly traded lender, advanced 2.3 percent. Honda Motor Co., a carmaker that depends on Europe for 15 percent of its sales, reversed earlier losses after a gain in the euro boosted the outlook for export earnings. Tokyo Electric Power Co., the utility at the center of the worst nuclear disaster in 25 years, tumbled 11 percent after a report it promised creditors not to seek debt relief.

The Nikkei 225 Stock Average advanced 1 percent to 8,701.23 at the 3 p.m. close of trading in Tokyo after earlier declining as much as 1.3 percent. The gauge has fallen 2.8 percent this month. For the quarter, the Nikkei is headed for an 11 percent decline, the steepest drop since the three months ended June 2010. The broader Topix index gained 1.1 percent to 762.30 today.

“It’s all about Europe,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “The focus is on whether they can establish unity.”

German lawmakers are expected to vote today for an expansion of a euro-rescue fund. The plan before the lower house in Berlin would allow the fund to buy bonds of distressed states and offer emergency loans to governments, raising Germany’s guarantees to 211 billion euros ($287 billion) from 123 billion euros.

‘Lingering Economic Concern’

“Germany’s parliament will pass the measure, which is supporting financial equities,” said Kazuyuki Terao, chief investment officer of RCM Japan Ltd. “Still, lingering concern about the economy mean you can’t buy stocks sensitive to growth.”

Futures on the Standard & Poor’s 500 Index rose 0.8 percent today. The index dropped 2.1 percent yesterday in New York after an official said the European Commission is resisting calls for banks to accept larger writedowns on their holdings of Greek debt. Stocks also fell yesterday as Italian and Spanish financial market regulators extended temporary bans on short selling of financial shares.

Mitsubishi UFJ advanced 2.3 percent to 355 yen in Tokyo after earlier falling as much as 1.7 percent. Sumitomo Mitsui Financial Group Inc., the country’s second-biggest lender, climbed 2.3 percent to 2,219 yen.

Honda, Sony

Exporters reversed losses after the yen depreciated against the euro. Honda gained 1 percent to 2,332 yen, after falling as much as 3 percent. Sony Corp., Japan’s No. 1 exporter of consumer electronics, rose 0.8 percent to 1,515 yen, reversing a 2.1 percent drop. The maker of televisions and game consoles depends on Europe for about a quarter of its sales.

The Topix has lost 22 percent from a high this year on Feb. 21 amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.92 times book value, near the lowest since March 2009.

Tokyo Electric slid 11 percent to 233 yen after the Nikkei newspaper reported that, while seeking loans from banks, the utility promised it wouldn’t seek debt relief.

--Editor: Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.


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