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Japan's Stocks Gain; Main Board's Market Value Tops 500 Tln Yen

Japan's Stocks Gain; Main Board's Market Value Tops 500 Tln Yen

Dec. 5 (Bloomberg) -- Japanese stocks rose, pushing the main board's value above 500 trillion yen ($4.1 trillion) for the first time in 15 years. Banks including Mizuho Financial Group Inc. gained after a report showed a jump in capital spending.

``More and more investors are becoming confident because of Japan's strong capital investment, and the report today nicely backed up that view,'' said Tomokatsu Mori, who helps oversee $1 billion at Fukoku Capital Management Inc. in Tokyo. ``Banks continue to benefit from the economic recovery and they will lead the market higher.''

The Nikkei 225 Stock Average climbed 129.71, or 0.8 percent, to 15,551.31 at the 3 p.m. close in Tokyo. The Topix index jumped 13.85, or 0.9 percent, to 1597.57. The Nikkei closed at its highest since Oct. 10, 2000, while the Topix ended at its highest since July 12, 2000, in record trading.

The total market capitalization of companies listed in the first section of the Tokyo Stock Exchange was at 504 trillion yen at the close, topping 500 trillion yen for the first time since July 1990, according to the Tokyo bourse.

The Topix and the Nikkei have surged more than 23 percent in the past three months, making them the second and fourth-best performers in local currency terms among the 80 major global stock indexes tracked by Bloomberg. Benchmarks in Colombia and Kuwait are the only ones that have outperformed.

Capital spending, including investment in software, rose 9.6 percent from a year earlier, the Ministry of Finance said in a report released before the market opened. The median forecast of seven economists in a Bloomberg survey was for a 6.8 percent gain.

`Tailwind'

A record 3.7 trillion yen in shares included in the Topix changed hands, 49 percent more than the daily average for the past three months. Three shares gained for every one that fell on the Tokyo Stock Exchange's first section.

Mizuho, Japan's second-biggest lender, climbed 24,000 yen, or 2.8 percent, to 894,000. Mitsubishi UFJ Financial Group Inc., the biggest bank in Japan, advanced 30,000 yen, or 1.9 percent, to 1.59 million. Resona Holdings Inc., the fourth largest, jumped 16,000 yen, or 3.9 percent, to 425,000.

Machinery makers also advanced. Amada Co., a maker of metal cutting and punching machines, rose 46 yen, or 4.5 percent, to 1,075. Okuma Holdings Inc., which makes machine tools and industrial machinery, surged 101 yen, or 9.1 percent, to 1,217.

``I'm expecting the report to reflect strength in the capital spending growth and that's going to give a tailwind to some of the machinery makers,'' said Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities Co. in Tokyo before the figures were released. He said manufacturers including Amada, Keyence Corp. and Fanuc Ltd. look attractive.

Fast Retailing Jumps

Fast Retailing Co., Japan's largest casual clothing chain, surged by the daily exchange-imposed limit of 1,000 yen, or 11 percent, to 10,360. The company said November same-store sales rose 13 percent, the biggest gain since June, as winter clothes attracted customers.

United Arrows Ltd. jumped 610 yen, or 9.6 percent, to 7,000. The apparel store chain said November same-store sales jumped 15 percent. The number of customers at stores opened at least 12 months rose 5.4 percent, and sales per customer gained 9.4 percent.

``There are lots of positives that are going to be propelling Japanese stocks going forward,'' said Martin Schulz, who helps oversee $26 billion at Allegiant International Equity Fund in Cleveland. ``We believe that momentum will be probably driving stocks next year.''

He favors stocks including Yamada Denki Co., Nitto Denko Corp., a maker of chemical products used in electronic components such as semiconductors, and Neomax Co., a magnet maker.

Oil Stocks Gain

Oil-related shares including Inpex Corp. also advanced after crude oil for January delivery jumped 1.5 percent to $59.32 a barrel on the New York Mercantile Exchange, the highest close since Nov. 8. The contract recently gained 0.8 percent to $59.79 in after-hours electronic trading.

A measure tracking energy-related companies jumped 4.2 percent, the biggest gain among 33 industry groups in the Topix.

Inpex, Japan's largest oil explorer, climbed 39,000 yen, or 4.3 percent, to 946,000. AOC Holdings Inc., an oil company established through the merger of Arabian Oil co. and Fuji Oil Co., jumped 98 yen, or 5.1 percent, to 2,020.

AOC last week said it expects to increase its oil product exports more than sixfold by 2009 to benefit from prices that have been driven to records by growing Asian demand and lack of refining capacity in the U.S.

The Nikkei earlier fell as much as 0.3 percent before rebounding after a U.S. government report showed accelerating job growth, renewing concern the Federal Reserve will keep raising interest rates.

A U.S. Labor Department report showed the economy had the biggest payroll gain since July, adding 215,000 jobs in November. The unemployment rate held at 5 percent. Economists predicted payrolls would rise by 210,000 in a Bloomberg News survey.

`Some Doubt'

The Fed's rate-setting Open Market Committee unanimously voted Nov. 1 to raise its main rate to 4 percent to stem inflation. Traders expect the Fed to increase the overnight lending rate by a quarter point at each of the next two meetings on Dec. 13 and Jan. 31, and probably again on March 28, based on futures contracts tied to the federal funds rate.

Some exporters fell. Fuji Photo Film Co., the world's second- largest filmmaker, declined 50 yen, or 1.2 percent, to 4,040. TDK Corp., Japan's largest maker of magnetic parts for hard disk drives, declined 70 yen, or 0.7 percent, to 10,000.

Nikkei 225 futures for December delivery rose 1.2 percent to 15,560 in Osaka and added 1.1 percent to 15,560 in Singapore.

Amada Co. (6113 JT)
AOC Holdings Inc. (5017 JT)
Fast Retailing Co. (9983 JT)
Fuji Photo Film Co. (4901 JT)
Inpex Corp. (1604 JT)
Mitsubishi UFJ Financial Group Inc. (8306 JT)
Mizuho Financial Group Inc. (8411 JT)
Okuma holdings Inc. (6103 JT)
Resona Holdings Inc. (8308 JT)
TDK Corp. (6762 JT)
United Arrows Ltd. (7606 JT)

To contact the reporter for this story:
Tomoko Yamazaki in Tokyo at [e-mail].


LINK: http://www.bloomberg.com/apps/news?pid=10000101&sid=a3zUgrwTr49w&refer=japan