Japanese Stocks Gain on Improving U.S. Outlook

Japanese stocks gained, sending the Topix to its highest level in more than seven months, as expansion in U.S. manufacturing boosted confidence in a global economic recovery and commodity prices climbed.

Mitsubishi Corp., Japan’s biggest commodities trader, jumped 4.7 percent and Inpex Corp., the nation’s largest oil and gas explorer, increased 4.5 percent as oil and copper prices strengthened. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 bank by market value, advanced 1.4 percent. Sony Corp., an electronics maker that earns about 70 percent of its revenue outside of Japan, climbed 1.6 percent.

“The U.S. data were good,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which manages about $57 billion in assets. “Investors are looking on the bright side, and there is support from excess liquidity.”

The Nikkei 225 Stock Average rose 1.4 percent to 10,373.85 at the midday trading break in Tokyo. The broader Topix advanced 1.4 percent to 911.21, with more than 12 times as many shares climbing as falling and all 33 industry groups gaining. The Topix is set for the highest close since May 18, 2010.

Japan’s government has pledged to bolster growth with 35 trillion yen （$427 billion） in asset purchases including exchange-traded funds and real estate investment trusts.

The Topix retreated 10 percent at the close on Dec. 30 from its high last 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 Topix were valued at 15.6 times estimated earnings on average as of the last close, compared with 14.9 times for the Standard & Poor’s 500 Index and 11 times for the Stoxx Europe 600 Index.

Commodity Stocks

Mitsubishi Corp. jumped 4.7 percent to 2,301 yen. Mitsubishi had the biggest gain in the Nikkei 225, followed by Inpex. Mitsui & Co., a trading house that counts commodities as its major source of profit, advanced 2.5 percent to 1,374 yen.

Oil companies had the biggest increase among the Topix’s industry groups. Inpex soared 4.5 percent to 497,000 yen. Japan Petroleum Exploration Co., the nation’s second-largest oil explorer, gained 4.1 percent to 3,215 yen.

Crude oil for February delivery increased 17 cents to $91.55 a barrel in New York yesterday, the highest settlement price since Oct. 3, 2008. Copper futures for March delivery climbed as much as 5.1 cents to a record $4.498 yesterday. The London Metal Exchange Index of six metals including copper and aluminum was closed for a holiday.

Mitsubishi UFJ rose 1.4 percent to 445 yen and its closest rival Sumitomo Mitsui Financial Group Inc. advanced 1.6 percent to 2,938 yen.

U.S. Manufacturing

Sony increased 1.6 percent to 2,973 yen. Kyocera Corp., an electronic-equipment maker that earns a third of its revenue from the U.S. and Europe, gained 2.1 percent to 8,460 yen. Electronics makers contributed the most to the Topix’s gain among its 33 industry groups, followed by trading houses and banks.

The U.S.-based Institute for Supply Management’s manufacturing index rose to 57 in December from 56.6 in November. A reading greater than 50 indicates expansion.

The S&P 500 Index gained 1.1 percent yesterday in New York, and all 10 industry groups advanced after the ISM report showed U.S. manufacturing expanded in December at the fastest pace in seven months and construction spending in November rose for a third month. European manufacturing expanded more than initially estimated in December, London-based Markit Economics said.

“The soundness of the economic figures may ease investors’ recent worries,” said Kazuhiro Takahashi, a general manager at Tokyo-based Daiwa Securities Capital Markets Co. “Short-term funds are flowing into commodities and stocks.”