May 22 (Bloomberg) -- Japanese stocks advanced, led by banks, after Sumitomo Mitsui Financial Group Inc. forecast profit will increase for this business year.
Sumitomo Mitsui climbed 3.8 percent after projecting a 22 percent increase in its net income for this business year. NEC Corp. jumped 7 percent, the biggest gain since Oct. 2005, after saying profit will triple this year.
``People are saying Sumitomo Mitsui's earnings forecast is still conservative and speculation over bigger profit growth in the industry pushed bank shares higher,'' said Katsunori Hirai, who helps oversee $20 billion in assets at Tokio Marine Asset Management Co. in Tokyo. ``Some investors started to buy technology shares on the expectation they will benefit from a possible recovery in the U.S. economy later this year.''
U.S. gross domestic product, the sum of all goods and services produced, rose at an annual rate of 1.3 percent in January through March, compared with a 2.5 percent gain the previous quarter and economists' estimate for 1.8 percent growth.
This month, the Reuters/University of Michigan preliminary index of sentiment rose unexpectedly to 88.7 from 87.1 in April.
The Nikkei 225 Stock Average added 100.79, or 0.6 percent, to 17,657.66 as of 10:56 a.m. in Tokyo. The broader Topix index rose 13.55, or 0.8 percent, to 1724.22.
Sumitomo Mitsui, Japan's third-largest bank by assets, climbed 40,000 yen, or 3.8 percent, to 1.1 million. Mizuho Financial Group, the country's No. 2, climbed 17,000 yen, or 2.2 percent, to 786,000. Mitsubishi UFJ Financial Group Inc., the nation's largest, rose 20,000 yen, or 1.5 percent, to 1.34 million.
NEC Climbs
Sumitomo Mitsui forecast profit will rise 22 percent to 540 billion yen ($4.45 billion) for the 12 months to March 2008.
Mizuho is scheduled to report earnings today after the market closes, followed by Mitsubishi UFJ tomorrow.
Among the companies that reported results yesterday, NEC, Japan's largest personal computer maker, climbed 41 yen, or 7 percent, to 630, the largest gain since Oct. 4, 2005. NEC said yesterday net income will increase to 30 billion yen in the 12 months ending March 31, exceeding the 9.1 billion yen a year earlier.
Other technology-related shares also advanced. Sony Corp., the world's biggest video-game maker, climbed 180 yen, or 2.6 percent, to 7,120. Sony said on May 16 its profit will more than double to a record this year. Canon Inc., the world's No. 1 digital camera maker, added 50 yen, or 0.7 percent, to 7,120. Canon reported a record first-quarter profit and raised its net income forecast on April 24.
Yamaha Corp., a maker of musical instruments, added 50 yen, or 1.9 percent, to 2,695 after saying it will sell 7.8 percent of Yamaha Motor Co., which produces motorcycles, for 63 billion yen and book a gain of 29 billion yen.
Three percent of Yamaha Motor will go to Mitsui & Co. today, and the rest will be sold to institutional investors through a brokerage later this month, Yamaha said yesterday after the market closed.
Takeda Pharmaceutical Co., Japan's biggest drugmaker, gained 110 yen, or 1.4 percent, to 7,860 after researchers said GlaxoSmithKline Plc's drug Avandia, the world's top-selling oral diabetes treatment, may raise a patient's chance of having a heart attack. Takeda sells similar product, Actos, that doesn't have a heart risk.
Nikkei futures expiring in June rose 0.6 percent to 17,670 in Osaka and advanced 0.6 percent to 17,665 in Singapore.
To contact the reporter for this story: Makiko Suzuki in Tokyo at Msuzuki13@bloomberg.net
Last Updated: May 21, 2007 22:00 EDT
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