By Patrick Rial and Kotaro Tsunetomi Nov. 5 (Bloomberg) -- Japan stocks extended a record rally from a 26-year low on speculation U.S. president-elect Barack Obama will take additional steps to spur economic growth and as a rise in commodities prices sparked gains by resource companies. Honda Motor Co. climbed 13 percent on speculation U.S. lawmakers may push for more policies to boost the economy. Inpex Holdings Inc. and Japan Petroleum Exploration Co., the nation's biggest oil explorers, jumped more than 12 percent after crude rose the most in six weeks. Mizuho Financial Group Inc., Japan's No. 2 listed bank, gained 16 percent as tumbling money market rates indicated credit is easing. Sumitomo Heavy Industries Ltd. soared the most in 22 years after profit exceeded its forecast. The Nikkei 225 Stock Average rose 406.64, or 4.5 percent, to close at 9,521.24 in Tokyo. The gauge has rebounded 33 percent from a 26-year low on Oct. 27, its best six-day gain according to available data back to 1970. The broader Topix index surged 56.21, or 6.2 percent, to 966.91, its third-largest advance this year. ``The hopes are that the incoming president will start formulating some new economic relief measures,'' said Hiroshi Chano, who helps manage $7.3 billion at Yasuda Asset Management Co. in Tokyo. ``People are jumping back in as dividends remain high and there are some stocks with solid earnings outlooks. The Nikkei should be heading back to 10,000 soon.'' Obama, a Democratic senator from Illinois, defeated Republican rival John McCain to become the 44th U.S. president by crossing the requisite threshold of 270 electoral votes when television networks declared him the winner in California. `New Policies' The Standard & Poor's 500 Index jumped 4.1 percent in New York yesterday, the biggest presidential Election Day rally in 24 years, as oil rose and people briefed on the matter said the government may broaden the focus of its rescue program. ``Bush is basically a lame duck at this point, so the confirmed selection of Obama is positive because it makes it easier to hammer out new economic policies,'' said Gentoku Kiyokawa, director of Fortis Investments in Tokyo, which oversees $200 billion in assets globally. Honda, which gets half its sales from North America, climbed 13 percent to 2,745. Komatsu Ltd., the world's No. 2 maker of construction machinery, gained 14 percent to 1,312 yen. Nintendo Co., which depends on overseas sales for 80 percent of its revenue, rose 11 percent to 36,300 yen in Osaka trading. The Treasury may take stakes in non-bank financial firms amid signs the $163 billion it has given to banks in exchange for equity is restoring investor confidence, people familiar with the matter said. Economists including Harvard University's Martin Feldstein, New York University's Nouriel Roubini and Larry Hatheway of UBS AG are calling for the next U.S. president to enact stimulus packages worth $300 billion or more. Crude Surge Inpex soared a record 16 percent to 674,000 yen after crude surged and the company won approval to buy a 20 percent stake in a Brazilian oil field. Smaller rival Japan Petroleum rose by its daily limit of 500 yen to 4,450. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 11 percent to 1,025 yen after reporting operating profit more than doubled in the second quarter. Crude oil for December delivery jumped 10 percent to $70.53 a barrel in New York yesterday, the biggest one-day gain since Sept. 22. Copper added 6.4 percent while nickel surged 8.1 percent as the dollar weakened against global currencies. Mizuho soared 16 percent to 288,400 yen, bringing its gain over the last four trading sessions to 39 percent. Mitsubishi UFJ Financial Group Inc., the country's biggest lender by value, rose 11 percent to 698 yen. `Normal Levels' The London interbank offered rate, or Libor, for one-month loans slid 18 basis points yesterday to the lowest level since November 2004, spurred on by central-bank cash injections and interest-rate cuts worldwide. The Tokyo equivalent for yen, or Tibor, fell by almost 10 basis points to 0.79 percent yesterday, according to the Japanese Bankers Association. The rate was little-changed today. ``We're seeing a return to more normal levels as investors who didn't want to sell were forced to anyway because of redemptions,'' said Hiromichi Tsuyukubo, a hedge-fund manager in Tokyo at Myojo Asset Management Japan Co., which oversees about $100 million. ``The massive amount of funds being pumped into the system has caused interbank rates to plummet, which has basically eliminated risks to the financial system.'' Sumitomo Heavy, Japan's largest maker of plastic injection- molding gear, soared 23 percent to 376 yen, the sharpest gain since Nov. 18, 1986. Profit in the six months ended in September was 19.8 billion yen ($199 million), beating its May 13 forecast by 24 percent, according to an earnings statement yesterday. Sanyo Electric Co., the world's largest rechargeable- battery maker, jumped 18 percent to 230 yen, adding to a 35 percent rally yesterday, after a company official with Panasonic Corp. said the electronics maker will seek to buy a controlling stake in Sanyo. Japan Steel Works Ltd. climbed its daily limit of 100 yen to 852. The maker of nuclear reactor parts lifted its full-year profit forecast to 19.5 billion yen from an earlier outlook for 17.7 billion yen. To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net

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