Japan Stock Advances

Japan's stocks rose after Federal Reserve Chairman Ben. S. Bernanke indicated the central bank will keep U.S. interest rates on hold, boosting the dollar and the earnings outlook for Japanese makers of cars and electronics.

Honda Motor Co., which gets more than half of its profit from North America, headed for the highest this year, while Sony Corp. sent electronics makers higher. Mitsubishi Corp., which gets more than half its profit from commodities, declined after prices for oil and metals retreated.

The Nikkei 225 Stock Average climbed 74.94, or 0.5 percent, to 14,284.11 as of 9:51 a.m. The broader Topix index rose 6.64, or 0.5 percent, to 1,414.08. Two stocks gained for each that declined on the Topix.

The yen depreciated to as much as 105.56 against the dollar from 104.25 at the close of stock trading in Tokyo yesterday. Crude oil tumbled 2.7 percent to $124.31 a barrel, the lowest since May 15, while gold sank 1.3 percent, as the dollar's rally reduced the appeal of commodities as an inflation hedge.

Honda, Japan's second-largest carmaker, jumped 5.2 percent to 3,670 yen, set for the highest since Dec. 28. Mazda Motor Corp., which exports 80 percent of domestic production, soared 7.5 percent to 589 yen. Sony jumped 2.1 percent to 5,470 yen and Matsushita Electric Industrial Co. advanced 1.2 percent to 2,470 yen. Automakers and electronics companies accounted for about 60 percent of the Topix's gain.

Mitsubishi, Japan's largest trading company, dropped 1.4 percent to 3,630 yen, while rival Sumitomo Corp., which has a stake in the Cerro Verde copper mine in Peru, fell 1.6 percent to 1,529 yen. No. 2 trading company Mitsui & Co. slumped 1.4 percent to 2,565 yen.

Meanwhile, corporate capital spending excluding software fell 5.3 percent in the first quarter from a year earlier, Japan's Finance Ministry said today before the market opened. Economists had estimated a 7.3 percent decline. The Cabinet Office will use today's report to revise its estimate of gross domestic product on June 11.

Fast Retailing Co., Japan's biggest clothing retailer, soared 10 percent to 9,760 yen, headed for the sharpest leap since Aug. 9. The company may report profit that exceeds its target for the year to Aug. 31, the Nikkei newspaper reported today, without saying where it got the information.

Nikkei futures expiring in June climbed 0.7 percent to 14,290 in Osaka and gained 0.8 percent to 14,290 in Singapore.

Japan Stock Advances

TradingEconomics.com, Bloomberg
6/3/2008 7:46:38 PM