BS: Japanese Stocks Advance as Euro Concerns Ease, Commodities Rise
May 28 (Bloomberg) -- Japanese stocks rose for a second day, after shares surged in Europe and the U.S. on China’s pledge to invest in the euro zone and as the yen weakened.
Fanuc Ltd., which earns nearly 20 percent of its revenue in Europe, jumped 3.8 percent. Canon Inc., a camera maker that counts Europe as its biggest market, climbed 1.4 percent. Inpex Corp., Japan’s largest energy explorer, rallied 4.8 percent. Mitsui & Co., a trading house that counts commodities as its biggest source of profit, increased 1.4 percent as prices of metals and oil increased.
“Stocks are undervalued, assuming Europe’s problems won’t spill over and cripple the global economy,” said Ayako Sera, a strategist at Tokyo-based Sumitomo Trust & Banking Co., which manages the equivalent of $307 billion. “The recent drops provide long-term investors with a good opportunity to buy companies that will benefit from growth in demand worldwide.”
The Nikkei 225 Stock Average rose 1.3 percent to 9,763.67 as of 1:09 p.m. in Tokyo. The Topix gained 1.1 percent to 879.74, with more than six times as many shares advancing as decreasing. The Nikkei 225 has dropped 0.2 percent this week, while the Topix has increased less than 0.1 percent.
Companies in the Topix trade at 17.2 times estimated earnings on average, compared with 13.6 times for the Standard & Poor’s 500 Index and 11.4 times for the Stoxx Europe 600 Index.
China’s Commitment
The Topix climbed 1.3 percent yesterday as shipping lines rose on the outlook for stronger demand and trading companies gained on higher commodity prices. The gauge tumbled 13 percent as of yesterday from this year’s high on April 15 on concern some European countries will struggle to shrink budget deficits, even after the region’s leaders unveiled a bailout plan worth almost $1 trillion.
Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The S&P 500 index rallied 3.3 percent yesterday in New York, even after the Commerce Department said that the U.S. economy grew in the first quarter at a slower pace than previously calculated. The gauge jumped as China’s commitment to invest in Europe allayed concern the debt crisis will worsen. Energy shares rallied as BP Plc temporarily stopped the flow of oil from a Gulf of Mexico leak.
China’s official Xinhua News Agency said the nation’s $300 billion sovereign wealth fund will maintain its investments in the euro region, citing China Investment Corp. President Gao Xiqing.
Canon Gains
“Investors’ concerns are mitigated by China’s intention to invest in Europe,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.
Separately, Federal Reserve Bank of St. Louis President James Bullard said Europe’s sovereign debt crisis is likely to be contained within the region as the recovery trajectory in the U.S. and Asia protects them from contagion.
Canon rose 1.4 percent to 3,730 yen. Toyota Motor Corp., a carmaker that gets about 40 percent of its revenue in North America and Europe, advanced 1.4 percent to 3,320 yen. Toyota was the biggest contributor to Topix’s gains, followed by Canon. Fanuc Ltd. jumped 3.8 percent to 9,590 yen, and was the biggest contributor to the Nikkei 225’s advance.
Sony Corp. climbed 1.9 percent to 2,841 yen after the maker of the PlayStation 3 game machine announced plans to sell its digital-book device in China, Japan and Australia this year.
The yen weakened to as low as 112.76 per euro today from 110.96 at the 3 p.m. close of Tokyo stock trading yesterday. Against the dollar, the Japanese currency depreciated to as much as 91.37 from 90.32. A weaker yen boosts the value of overseas sales at Japanese companies when repatriated.
The currency strengthened to 112.02 per euro as of 12:55 p.m. in Tokyo, compared with 112.39 as of midday trading break of the Tokyo stock exchange. The yen appreciated to 91.11 per dollar from 91.24.
Commodities Climb
Mitsui & Co., a trading house that counts commodities as its biggest source of profit, increased 1.4 percent to 1,321 yen. Inpex, Japan’s largest energy explorer, gained 4.8 percent to 573,000 yen, set for the steepest rise since Nov. 5.
Mitsui Mining & Smelting Co., which owns part of Japan’s top copper smelter, gained 3.6 percent to 261 yen after UBS AG boosted the equity rating to “buy” from ”neutral.” The mining industry was the biggest gainer on the Topix’s index.
The London Metal Exchange Index, a measure of six metals including copper and zinc, gained 3 percent yesterday, the highest level since May 14. Crude oil for July delivery rose 4.3 percent in New York yesterday, the biggest one-day increase since Sept. 30.
