Japanese Stocks Rise for a Third Day; Trading Houses Lead Gains

Japanese stocks advanced for a third day, led by trading companies such as Mitsui & Co., after the price of oil climbed to a 10-month high and a brokerage gave the company its most bullish recommendation.

Oil advanced 1.6 percent to close above $70 a barrel last week. Mitsubishi UFJ Securities Co. initiated coverage of Mitsui with a ``strong outperform'' rating.

Japan Steel Works Ltd. led machinery makers higher after the Bank of Japan's quarterly Tankan survey of business sentiment showed companies increased their planned capital spending. Orix Corp. led advances by leasing companies after the survey showed confidence among businesses in the industry exceeded forecasts.

For trading houses, ``the fundamental outlook continues to be good with all the commodity prices much higher than expected,' said Masafumi Oshiden, a fund manager at BlackRock Japan Co. in Tokyo, whose parent company holds $1.1 trillion in assets. ``The Tankan was not much of a surprise, but slightly on the positive side, compared with market consensus.''

The Topix index added 5.48, or 0.3 percent, to 1780.36 at the close of trading in Tokyo, after dropping as much as 0.3 percent. About nine stocks rose for every seven that declined. The Nikkei 225 Stock Average rose 7.94 points to 18,146.30, reversing a decline of as much as 0.4 percent.

A measure including trading companies gained 1.6 percent, the best performer among the 33 industry groups in the Topix.

Property developers fell, led by Mitsubishi Estate Co., after the country's largest banks raised interest rates on fixed-rate mortgages. Higher mortgage rates may damp demand among consumers for buying property.

Nikkei futures expiring in September added 0.2 percent to 18,190 in Osaka and gained 0.2 percent to 18,180 in Singapore.

source:bloomberg.com