Japanese Stocks Advance on Nissan, Central JR Earnings Reports

By Patrick Rial


Oct. 29 (Bloomberg) -- Japanese stocks rose, led by Nissan Motor Co., which reported profit that beat analysts' estimates, and Central Japan Railway Co. after it boosted its full-year earnings forecast.

Nissan surged the most in more than seven years.

``We're going to increasingly see companies with strong earnings attract buying, while the opposite is true for those who don't produce positive results,'' Norihiro Fujito, a senior strategist at Mitsubishi UFJ Securities Co. in Tokyo. ``There's no clear trend of certain industries doing well, so we have to look at each company individually.''

Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, tumbled after profit fell and it slashed its full-year forecast.

Exporters including Canon Inc. and banks such as Mizuho Financial Group Inc. gained after Countrywide Financial Corp., the largest U.S. mortgage lender, predicted a return to profit in the current quarter, increasing speculation the worst may be over from the U.S. subprime mortgage problem.

The Nikkei 225 Stock Average rose 181.44, or 1.1 percent, to 16,687.07 as of 9:40 a.m. in Tokyo. The broader Topix index gained 28.28, or 1.8 percent, to 1,602.25, gaining the most since Sept. 27.

Nissan soared 115 yen, or 10 percent, to 1,239, the biggest jump since Sept. 29, 2000. Japan's No. 3 automaker said net income in the latest quarter totaled 120 billion yen ($1.1 billion), beating analyst estimates by 5.2 percent.

Nomura Holdings Inc. lifted its recommendation on Nissan to ``strong buy'' from ``buy,'' while Mitsubishi UFJ Securities Co. also increased its recommendation on the stock.

Countrywide Earnings

Central Japan Railway rose 10,000 yen, or 0.9 percent, to 1.19 million. Japan's No. 2 railway operator raised its full- year net income forecast 9.8 percent to 146 billion yen ($1.28 billion) on better-than-expected revenue.

Companies including Nippon Yusen K.K., the nation's biggest shipping line operator, and Mitsubishi Electric Corp., a maker of electronics ranging from refrigerators to medical devices, will report first-half earnings during trading hours today.

Advantest slumped 140 yen, or 4.1 percent, to 3,320. The company said on Oct. 26 first-half profit fell 24 percent after memory chip companies scaled back spending. The company also reduced its full-year forecast by 21 percent.

Canon, the world's largest seller of digital cameras and copiers, jumped 140 yen, or 2.5 percent, to 5,860. Toyota Motor Corp., the world's largest automaker by value, gained 180 yen, or 2.9 percent, to 6,420. Mizuho, Japan's No. 2 publicly traded bank, climbed 17,000 yen, or 2.8 percent, to 622,000.

Federal Reserve Meeting

Countrywide Financial said last week a $1.2 billion loss in the third quarter was the ``earnings trough'' and that it expects a return on equity of between 10 percent and 15 percent in 2008, without giving a profit forecast.

Mortgage defaults by people with poor credit histories triggered a worldwide rout in debt and stock markets in July and August, spurring losses for investment banks and sending the U.S. housing market deeper into recession.

During the last three months, lenders have been the worst performers among the 33 industry groups included in the Topix index.

Nintendo Co., Japan's second-largest video-game maker, rose 1,700 yen, or 2.5 percent, to 69,400. The company faces ``overwhelming'' demand for its Wii game console, Reginald Fils- Aime, president of Nintendo of America, said in an interview with the San Francisco Chronicle. Elsewhere, the Nikkei newspaper said on Oct. 27 Nintendo will start selling the Wii in China and South Korea next year.

Stocks also got a boost on increased expectations the Federal Reserve will cut U.S. interest rates at its meeting on Oct. 31. Futures contracts tied to interest rates indicate a 92 percent chance the central bank will reduce rates by a quarter percent point and an 8 percent chance it will slash rates by a half percent point. There were no expectations for a half-point cut a week ago.

Nikkei futures expiring in December jumped 1.3 percent to 16,700 in Osaka and Singapore.

In other Asian markets open for trading, Australia's S&P/ASX 200 Index rose 1 percent to a record and South Korea's Kospi index jumped 1.4 percent.