Barefoot Investor: Japan’s Nikkei 225 Rebounds From Two-Year Low on Signs of Europe Action

Japanese stocks gained, with the Nikkei 225 (NKY) Stock Average rebounding from its lowest level since April 2009, on expectation European leaders will act to prevent the region’s sovereign-debt crisis from getting worse.

Sumitomo Mitsui Financial Group Inc. (8316) advanced 2.8 percent after European and U.S. lenders surged yesterday following a report that the European Central Bank may resume buying some loan-backed bonds. Canon Inc. (7751), a camera maker that depends on Europe for about a third of its sales, climbed 2.4 percent. Sumitomo Metal Mining Co., Japan’s second-largest copper smelter, jumped 3.3 percent after prices for the metal rose.

“Market psychology got a little boost on speculation the ECB will take some action,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. in Tokyo. “Still, it’s too early to say the market has hit bottom.”

The Nikkei 225 rose 1.9 percent to 8,535.97 as of 12:31 p.m. in Tokyo. The broader Topix gained 1.8 percent to 741.64, with almost 10 times as many shares rising as falling. The gauge fell 19 percent this year through yesterday amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest markets.

The Standard & Poor’s 500 Index climbed 2.3 percent yesterday after a euro-region central bank official said the ECB may discuss buying some loan-backed securities from banks at a policy meeting on Oct. 6. Bank of America Corp. and JPMorgan Chase & Co. rose at least 4.6 percent. Futures on the S&P were little changed today.
Lenders Advance

Sumitomo Mitsui Financial Group, Japan’s second-largest publically traded lender, climbed 2.8 percent to 2,135 yen. Mitsubishi UFJ Financial Group Inc. gained 3 percent to 339 yen. Japan’s biggest bank by market capitalization also got a boost after Daiwa Securities Group Inc. raised the lender’s investment rating to “outperform” from “neutral.”

The European Central Bank may also discuss offering 12- month loans to banks again at the Oct. 6 policy meeting, according to the official. Interest-rate cuts are likely to be discussed, though they are not on the agenda, the official said. A spokesman for the Frankfurt-based ECB declined to comment.

Japanese exporters to Europe advanced as the yen weakened against the shared currency. Canon gained 2.4 percent to 3,440 yen. Olympus Corp., an optical-equipment maker that generates more than 20 percent of its sales in Europe, jumped 5.5 percent to 2,396 yen. Shares also rose after Cosmo Securities Co. initiated coverage of the endoscope maker with a rating of “neutral plus” and a price target of 2,800 yen.
Sumitomo Metal

The euro gained to as much as 103.57 yen today in Tokyo, compared with 102.18 at the close of stock trading yesterday. A stronger euro boosts the value of some income for Japanese exporters.

Resource companies gained after copper futures for December delivery advanced for the first time in three trading days. Sumitomo Metal Mining jumped 3.3 percent to 1,059 yen. Mitsui Mining & Smelting Co. also climbed 3.1 percent to 201 yen.

Toshiba Corp. and Tokyo Electron Ltd., two Japanese companies among many that go ex-dividend tomorrow, both advanced at least 3.1 percent. Today is the last day to buy shares in the companies and still get a first-half dividend. (Bloomberg)


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