June 1 (Bloomberg) -- Japanese stocks rose, led by shipping lines and resource companies, on optimism demand from the nation’s second-largest export market will increase after China’s manufacturing expanded for a third month. Nippon Yusen KK, the nation’s biggest shipping line, climbed 5.3 percent after China’s Purchasing Manager’s Index expanded in May. JFE Holdings Inc., Japan’s No. 2 steelmaker, rose 3.8 percent. Inpex Corp. advanced 3.6 percent on higher oil prices. Konica Minolta Holdings Inc. surged 9.2 percent after Goldman, Sachs & Co. raised its rating to “buy.” The Nikkei 225 Stock Average rose 111.84, or 1.2 percent, to 9,634.34 as of 12:36 p.m. in Tokyo, its fourth-straight advance and reaching the highest level since Oct. 7. The broader Topix index climbed 10.9, or 1.2 percent, to 906.82, with more three shares rising for every one that declined. “The market is really relying on the good news and ignoring the bad news for the time being,” Roger Groebli, head of market analysis at LGT Capital Management, said in an interview with Bloomberg Television. “I’ve been recommending to my clients since March to buy on the dip. Anytime there’s a pull-back in the market, investors are jumping in.” China’s Purchasing Manager’s Index fell to a seasonally adjusted 53.1 in May from 53.5 in April, the Federation of Logistics and Purchasing said today in Beijing. A reading above 50 indicates an expansion. A report due out tomorrow will probably show U.S. service industries shrank at a slower rate in May, signaling the economic slump is abating. The Institute for Supply Management’s index of non-manufacturing businesses, which make up about 90 percent of the U.S. economy, rose for a fifth month, reaching its highest level since September, according to economists surveyed by Bloomberg. Baltic Dry Nippon Yusen climbed 5.3 percent to 480 yen. Rival Mitsui O.S.K. Lines Ltd., the world’s largest merchant fleet operator, added 5 percent to 710 yen. Shippers also benefited as the Baltic Dry Index, a measure of shipping costs for commodities, climbed 5.9 percent on May 29 for a 20th-straight gain. Inpex, Japan’s biggest oil explorer, advanced 3.6 percent to 799,000 yen. Mitsubishi Corp., a trading company that gets more than half its profit from commodities, surged 5.6 percent to 1,899 yen. Oil climbed to the highest since Nov. 5 after China’s manufacturing report. Crude for July delivery rose as much as 64 cents, or 1 percent, to $66.95 a barrel on the New York Mercantile Exchange. Shippers and trading companies were the biggest winners among the Topix’s 33 industry groups. ‘Investors Relieved’ “There was concern that inventories would pile up if demand from China stalled, even temporarily,” said Yutaka Yoshii an analyst at Mito Securities Co. in Tokyo. “Investors are relieved to see inventories falling apace.” JFE Holdings, which gets 26 percent of its sales from Asia outside Japan, rose 3.8 percent to 3,290 yen. Nippon Steel Corp., the nation’s biggest mill, climbed 2.2 percent to 372 yen. A Japanese government report released before stock trading on May 29 showed steelmakers planned to raise production by more than 11 percent last month, the biggest increase since at least 1998. Nisshin Steel Co. soared 15 percent to 246 yen, making it the biggest winner on the MSCI World Index. Nomura Holdings Inc. started coverage of the steelmaker with a “buy” rating. Konica Minolta rose 9 percent to 1,080 yen, the highest price since Oct. 2. Goldman Sachs lifted the company’s rating from “neutral” and added the stock to its “Conviction Buy” list, citing expected improvement in its printer and optical operations. Orix Corp., Japan’s biggest non-bank financial company lost 1.7 percent to 5,890 yen. The company said on May 29 it had a 10.7 billion yen ($113 million) investment in developer Joint Corp., which filed for bankruptcy the same day. Joint shares were untraded and poised to plunge by the 80 yen daily limit from the last close of 213 yen. Sumco Corp. sank 6.3 percent to 1,377 yen, leading declines on the Nikkei. The maker of silicon wafers widened its first- half loss forecast, citing a drop in sales and depreciation costs.

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