Bloomberg News

Japan Stocks Rise as European Debt-Crisis Concern Ebbs

July 30, 2012

Japanese stocks rose for a third day as support grew among European leaders to tackle the debt crisis and ensure the survival of the monetary union, boosting the outlook for exporters.

Asics Corp., a maker of sporting goods that generates 24 percent of sales in Europe, advanced 1.8 percent. Konica Minolta Holdings Inc. (4902) surged 5.8 percent after first-quarter operating profit nearly doubled. Fujitsu Ltd., Japan’s biggest provider of computer services, plunged 12 percent to its lowest level since 1984 after posting a wider-than-expected loss.

The Nikkei 225 Stock Average advanced 0.8 percent to 8,635.44 at the close of trading in Tokyo, bringing its three- day gain to 3.2 percent. The broader Topix Index today climbed 0.7 percent to 731.74.

“There is a strong political and financial will for the euro,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian unit. The Swiss bank has about $1.5 trillion in assets under management globally. “Actions that address the EU challenges will create the opportunity for a sustainable rally ahead.”

Leaders in Berlin, Paris and Rome have backed European Central Bank President Mario Draghi’s approach to combat the sovereign-debt crisis, saying they will do what’s needed to protect the 17-nation euro. The proposal involves the region’s rescue fund buying government bonds, two central bank officials said July 27 on condition of anonymity.

The ECB chief meets with U.S. Treasury Secretary Timothy Geithner in Frankfurt today. Federal Reserve policy makers meet this week ahead of a jobs report to weigh additional stimulus to combat a slowdown in the world’s biggest economy.

Europe Stocks

Companies that do business in Europe advanced. Asics gained 1.8 percent to 904 yen. NTN Corp., a maker of bearings and machinery parts that gets 26 percent of sales from the region, advanced 1.5 percent to 201 yen.

Stocks rose even as Japan’s industrial production unexpectedly fell in June. Output fell 0.1 percent in June from May, when it dropped 3.4 percent, the Trade Ministry said today. The median estimate of 29 economists surveyed by Bloomberg News was for a 1.5 percent increase last month.

This week marks the busiest of Japan’s earnings season, with more than 700 companies on the Topix reporting results, according to data compiled by Bloomberg.

The Topix declined 1 percent last week, the third-straight loss, as concern about Europe’s debt crisis worsened after Moody’s Investors Service cut its credit rating outlook for Germany, the Netherlands and Luxembourg. The gauge’s 17 percent drop since March 27 has left it trading at almost half the valuation of the MSCI World Index (MXWO) relative to book value, or assets minus liabilities, data compiled by Bloomberg show.

Konica Surges

Konica Minolta rose 5.8 percent to 550 yen as operating profit surged 94 percent to 6.3 billion yen ($80.3 million).

Fujitsu fell 12 percent to 295 yen after reporting a loss of 23.8 billion yen for the three months ended June 30 as demand fell for its chips used in televisions and servers. Analysts had been expecting a 12.4 billion yen loss, according to estimates compiled by Bloomberg.

Hitachi Cable Ltd. slumped 9.2 percent to 139 yen as the maker of optical fibers lowered its full-year profit forecast.

Komatsu Ltd., the world’s second-largest maker of construction equipment, declined 1.8 percent to 1,731 yen. The Nikkei newspaper reported that the company’s first-quarter operating profit declined for the first time in 10 quarters after equipment sales in China halved due to lower public works spending.

Nuclear Hearings

Utilities lead declines among the Topix’s 33 industry groups. The shares fell after about 70 percent of participants in public hearings yesterday said the nation should end nuclear- power generation by 2030.

Kansai Electric Power Co. (9503) plunged 11 percent to 555 yen. Tokyo Electric Power Co., owner of the crippled Fukushima Dai- Ichi nuclear plant, lost 1.6 percent to 123 yen.

Steelmakers retreated after Nippon Steel Corp., Japan’s largest maker of the material, posted a first-quarter loss. The stock tumbled 4.4 percent to 153 yen. JFE Holdings Inc. slid 3 percent to 1,029 yen.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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