July 31 (Bloomberg) -- Japanese stocks rose, sending the Topix index to its longest winning streak in two decades, as earnings results at Sony Corp. and Mitsui Fudosan Co. boosted investor confidence in the prospects for corporate profits. Sony, maker of the PlayStation 3 game machine, climbed 6.8 percent. Mitsui Fudosan, Japan’s largest property developer, gained 5 percent after reporting first-quarter profit more than doubled. Nintendo Co., maker of the Wii game console, sank 4.6 percent in Osaka trading after sales fell more than expected. Investors shrugged off government reports that showed rising unemployment and a record drop in consumer prices. “An earnings and economic recovery in the second half was rather like a wishful thought,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $90 billion. “That’s getting more likely now and increasing investors’ appetite for risk assets.” The Nikkei 225 Stock Average climbed 191.62, or 1.9 percent, to 10,356.83 in Tokyo, its highest close since Oct. 6. The broader Topix rose 13.32, or 1.4 percent, to 950.26. The Topix gained for an 11th day, its longest stretch since May 1990. The Nikkei and Topix capped fifth monthly gains, the longest run since January 2006, as Japanese and U.S. companies reported better-than-anticipated results. For the week, the Nikkei climbed 4.2 percent, and the Topix added 3.2 percent. Bubble Forming? Sony, which plans to cut 16,000 jobs by March 31, rose 6.8 percent to 2,675 yen. The company reported a first-quarter net loss that was less than half analysts’ estimates. The recovery in Japan’s stock market lifted operating profit at the manufacturer’s financial unit, alleviating losses at its game and electronics divisions. “Without the financial unit, which isn’t Sony’s mainstay, earnings could have been much worse so I can’t think highly of the results,” said Makoto Haga, president of Tokyo-based Wing Asset Management Co. “Today’s gain in Sony probably shows a bubble is forming in the stock market.” Mitsui Fudosan climbed 5 percent to 1,740 yen. Net income more than doubled to 16.1 billion yen ($169 million) in the three months to June 30 as housing sales and revenue from new shopping malls increased, the company said. Sumitomo Realty & Development Co., which is scheduled to announce earnings next week, soared 6.5 percent to 1,950 yen. Real-estate companies as a group were the biggest winners among the 33 industry groups tracked on the Topix. Unemployment, Deflation “Those earnings reports are reflecting a gap among companies in the degree of their efforts to ride out the recession by cutting costs and cultivating customers,” Daiwa Asset’s Nagano said. “If many businesses try to eke out profits by cutting costs, it may deepen an economic slump.” The nation’s jobless rate jumped to 5.4 percent in June, a level not seen since June 2003, a statistics bureau report showed today. Prices excluding fresh food declined 1.7 percent from a year earlier last month, the sharpest since the survey began in 1971, according to a separate report from the bureau. Nintendo tumbled 4.6 percent to 25,590 yen in Osaka trading. The game maker said first-quarter net income plunged 61 percent. Sales fell 40 percent to 253.5 billion yen, a fifth lower than analysts’ estimates. Fuji Heavy Industries Ltd., an automaker that also assembles Boeing Co.’s Apache combat helicopter, tumbled 7.5 percent to 382 yen. Mazda Motor Corp., the world’s only mass producer of rotary engines, sank 6.1 percent to 248 yen. Both companies posted their third consecutive quarterly net losses. Nikkei futures expiring in September added 1.7 percent to 10,370 in Osaka and gained 1.6 percent to 10,370 in Singapore. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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