Japanese Stocks Gain as Weaker Yen Boosts Outlook for Exports; Honda Rises

Japanese stocks gained, sending the Nikkei 225 Stock Average to its first advance in three days, after the yen weakened, boosting expectations exporters’ earnings will improve.

Sony Corp., an electronics maker that earns about 40 percent of its revenue from the U.S. and Europe, climbed 1.2 percent. Fuji Heavy Industries Ltd., the maker of Subaru brand vehicles, advanced 1.6 percent. East Japan Railway Co., the nation’s largest train operator by sales, jumped 2.6 percent after Goldman Sachs Group Inc. iterated its “buy” rating. Sumitomo Corp., Japan’s third-largest trading company, rose 1.1 percent after metal prices climbed.

“The global economy is on track for mild recovery in terms of fundamentals,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Investors are likely to buy stocks, led by those of export-related industries, on the reversal of the yen’s appreciation.”

The Nikkei 225 Stock Average rose 0.9 percent to 10,235.18 as of 10:13 a.m. in Tokyo. The Topix advanced 0.7 percent to 885.23, with more than four times as many shares gaining as falling.

The Topix has tumbled 11 percent from its high this year on April 15 as Europe’s debt crisis, China’s steps to curb property prices and concern about U.S. economic growth damped confidence in a global recovery. Stocks in the index trade at 15.3 times estimated earnings on average, compared with 14.4 times for the Standard & Poor’s 500 Index and 12.2 times for the Stoxx Europe 600 Index.

Dollar Advances

The Standard & Poor’s 500 Index rose 0.1 percent yesterday, after surging 1 percent earlier. U.S. stocks pared gains in the final hour of trading, pulling the Standard & Poor’s 500 Index down from a two-year high, after a probe of insider trading reportedly widened and President Barack Obama said he’ll push to overhaul the tax code in two years.

The dollar climbed against most of its major counterparts as Treasury yields surged on speculation an agreement to extend tax cuts will boost the economy, increasing demand for U.S. assets. The greenback rallied against the euro and the yen afterObama broke a stalemate about extending middle-class tax cuts introduced by the administration of George W. Bush.

Sony rose 1.2 percent to 3,020 yen. Canon Inc., a Japanese camera maker that earns about 80 percent of its revenue overseas, advanced 0.7 percent to 4,085 yen.

Carmakers Gain

Electronics makers contributed the most to the Topix’s advance among its 33 industry groups, followed by carmakers.

Fuji Heavy gained 1.6 percent to 630 yen. Honda Motor Co., a carmaker that gets more than 80 percent of its sales abroad, increased 0.5 percent.

The yen depreciated to as low as 83.66 against the dollar today in Tokyo, compared with 82.51 at the close of stock trading yesterday. Against the euro, Japan’s currency weakened to 111.11 from 110.11. A weaker yen boosts overseas income at Japanese companies when converted into their home currency.

East Japan Railway rallied 2.6 percent to 5,210 yen and Central Japan Railway Co., the country’s biggest high-speed train operator, gained 1.1 percent to 663,000 yen.

Goldman Sachs Group Inc. maintained its “buy” rating on the railway companies, saying “we think recent declines have left the stocks undervalued” in a report dated today.

Sumitomo rose 1.1 percent to 1,187 yen. Mitsui & Co., a trading house that counts commodities as its biggest source of profit, increased 1.3 percent to 1,379 yen.

The London Metal Exchange Index of six metals including copper and aluminum gained 1.1 percent yesterday, rising for a second day. Copper climbed to a 31-month high in New York and reached a record in London on speculation that an extension of U.S. tax cuts will help bolster the economy, increasing demand for the industrial metal.