Japanese Stocks Climb on U.S. Jobs Report, Extension of Tax Cut

December 26, 2011, 3:00 AM EST By Norie Kuboyama

Dec. 26 (Bloomberg) -- Japanese stocks gained, with the Nikkei 225 Stock Average rising to its highest in nearly two weeks, after U.S. unemployment claims unexpectedly dropped and American lawmakers extended a tax cut.

Fanuc Corp., a maker of industrial robots that earns 75 percent of its revenue overseas, gained 2.9 percent. Mitsubishi Corp., Japan’s biggest commodities trader by revenue, rose 1.7 percent after oil and metals prices increased. Canon Inc. climbed 1.3 percent after the Nikkei newspaper said the camera maker may pay a 120 yen dividend this year.

“The U.S. economic data is not bad on the whole,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “Congress passed a two-month U.S. payroll tax cut extension, which reduced concerns in the market because investors had worried the end of the tax cut would likely weigh on January-March GDP.”

The Nikkei 225 rose 1 percent to 8,479.34 at the 3 p.m. close in Tokyo, the highest since Dec. 14. The broader Topix advanced 0.5 percent to 726.44, with trading volume 38 percent below the 30-day average.

The Topix has fallen 19 percent this year 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 export markets. The decline has cut the price of shares on the index to 0.87 times book value, near the lowest since March 2009.

Payroll Tax Cut

The Standard & Poor’s 500 Index added 0.9 percent in New York on Dec. 23 as claims for unemployment benefits unexpectedly dropped last week to the lowest since April 2008 and the U.S. Congress passed a two-month extension of a payroll tax cut eight days before it was due to expire.

“The worst-case scenario was avoided, and that was a positive for stocks,” said Naoki Murakami, chief economist at Monex Group Inc. in Tokyo.

JPMorgan Chase & Co. and Nomura Holdings Inc. cited the tax cut extension as a positive for the economy. JPMorgan raised its estimate for U.S. growth to 2.5 percent in 2012 from an earlier projection of a 1.9 percent rise.

Commodity prices gained on speculation an economic recovery in the U.S. may spur demand for oil and industrial metals. Crude oil for February delivery gained 0.2 percent to $99.68 a barrel in New York on Dec. 23, the highest settlement since Dec. 13. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum rose 0.7 percent.

Turnover on the first section of the Tokyo Stock Exchange fell to 500.8 billion yen ($6.4 billion) today, the lowest on a full-day basis since May 27, 2003.

The following are among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Machinery makers: Okuma Corp. (6103 JT), SMC Corp. (6273 JT) and other companies in the sector advanced after U.S. orders for durable goods such as commercial aircraft rose in November by the most in four months. Okuma gained 2.7 percent to 497 yen. SMC added 1.6 percent to 12,230 yen, while THK Co. (6481 JT) climbed 2.4 percent to 1,544 yen.

Canon Inc. (7751 JT), the world’s biggest camera maker, gained 1.3 percent to 3,460 yen, after the Nikkei reported the company is likely to pay a 120 yen dividend for this year, matching last year’s record payment. Canon anticipates an earnings recovery next year after Thailand floods and a strengthening yen cut profit, the report said.

Ebara Corp. (6361 JT), a hydraulic pump maker, climbed 3 percent to 278 yen, after the Nikkei said Ebara will boost production capacity in Southeast Asia. The company will invest as much as 3 billion yen to double sales in the region in three years, the report said.

Japan Hotel & Resort Inc. (8981 JT) rallied 5.8 percent to 164,900 yen, while Nippon Hotel Fund Investment Corp. (8985 JT) rose 1.2 percent to 187,300 yen after the real estate investment trusts said they will merge on April 1. Japan Hotel will be delisted shortly before the tie-up, according to a statement.

Makita Corp. (6586 JT), a maker of electric power tools, jumped 7.9 percent to 2,537 yen, its biggest rise since March 16. The company said it will buy back up to 1.45 percent of its outstanding shares.

Tokyo Electric Power Co. (9501 JT), the utility known as Tepco, lost 4.1 percent to 213 yen after the Nikkei reported the company may seek several hundred billion yen in fresh aid to compensate nuclear disaster victims. Tepco received 890 billion yen in state assistance last month.

-- With assistance from Toshiro Hasegawa in Tokyo. Editor: Jim Powell, Jason Clenfield.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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