Bloomberg News

Japan Shares Climb as Yen Weakens on Easing Euro Concern

March 25, 2013

Japanese shares rose, with the Topix Index climbing from the first weekly drop in five weeks, as the yen weakened after European Union finance ministers approved a bailout agreement for Cyprus today.

Sony Corp. (6758), a consumer-electronics exporter that gets 20 percent of its sales from Europe, gained 3.1 percent. Fuji Heavy Industries Ltd. rose 2.5 percent on a Nikkei newspaper report that the Subaru maker’s operating profit may surge. Furukawa (5715) Co. soared 22 percent to lead gains on the Nikkei 225 Stock Average after the industrial-machinery maker raised its dividend forecast. Konica Minolta Holdings Ltd. slumped 2.9 percent after the lensmaker’s investment rating was cut.

The Nikkei 225 gained 1.7 percent to 12,546.46 at the close in Tokyo, with volume 30 percent lower than the 30-day average. The Topix climbed 0.8 percent to 1,047.29. All but three of its 33 industry groups advanced.

“Now that they’ve reached an agreement, there’s relief as it seems the financial system has been saved for now,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co. in Tokyo, which oversees about $74 billion. “Fundamentals here remain strong, with the trend toward a weakening yen, as well as the global economic recovery with the U.S. and Asia boosting Japanese exporters.”

The Topix rallied 45 percent from Nov. 14, when elections were announced that brought Prime Minister Shinzo Abe to power on a platform of increased stimulus and monetary easing from the central bank. The gauge is trading at 1.2 times book value, compared with 2.2 times net assets for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Cyprus Agreement

Futures on the S&P 500 climbed 0.4 percent today. The U.S. equity gauge rose 0.7 percent on March 22, paring its second weekly drop, as earnings from Nike Inc. and Tiffany & Co. beat estimates and optimism grew that Cyprus would secure a bailout.

Finance ministers from the 17-nation euro area approved a rescue agreement for Cyprus during talks in Brussels today, eliminating the threat of default and the country’s disorderly exit from the shared currency.

Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank under pressure from a German-led bloc of creditors in a night-time negotiating melodrama that threatened to rekindle the debt crisis and rattle markets.

The yen fell 0.7 percent to the euro and 0.3 percent to 94.78 against the dollar today, paring last week’s gain of 0.9 percent. A weaker currency boosts overseas earnings when repatriated.

Sony advanced 3.1 percent to 1,712 yen. Toyota Motor Corp. (7203), the world’s biggest carmaker, gained 0.8 percent to 4,920 yen. Shimano Inc., a maker of bicycle parts that counts Europe as its top market, advanced 1.4 percent to 7,300 yen.

Furukawa Soars

Among other stocks that advanced, Fuji Heavy climbed 2.5 percent to 1,509 yen. The Nikkei reported the company is likely to post operating profit of 80 billion yen, compared with 1 billion yen in profit last fiscal year.

Furukawa surged 22 percent to 123 yen, its biggest gain since October 2008. The company said it will pay a dividend of 2 yen per share, compared with no payment the previous year.

Konica Minolta declined the most on the Nikkei 225. (NKY) The stock lost 2.9 percent to 750 yen after being lowered to hold from buy at Jefferies Group LLC, which also cut its price target by 50 yen to 800 yen.

The Nikkei Stock Average Volatility Index (VNKY) fell 6.8 percent to 25.62 today, indicating traders expect a swing of about 7.3 percent on the benchmark gauge over the next 30 days.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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


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