Japan's Stocks Advance, Paced by Automakers; Toyota Rises

By Makiko Suzuki

June 1 (Bloomberg) -- Japanese shares gained, led by automakers, on speculation Toyota Motor Corp.'s U.S. sales rose in May and that the company will report higher-than-estimated earnings for the first three months of this business year.

Denso Corp. and Aisin Seiki Co., Toyota affiliates that make auto parts, jumped. Nippon Mining Holdings Inc. and Mitsui & Co. advanced after prices of crude oil and metals climbed.

``Investors bought Toyota on speculation it will post first-quarter earnings that are much better than the company forecast,'' said Mitsushige Akino, who oversees the equivalent of $470 million at Ichiyoshi Investment Management Co. in Tokyo. ``Commodity shares are also on a rising trend helped by a more optimistic outlook on oil and metals prices.''

The Nikkei 225 Stock Average added 83.13 or 0.5 percent, to 17,958.88. The Topix index rose 12.20, or 0.7 percent, to 1767.88.

Toyota jumped 160 yen, or 2.2 percent, to 7,460, leading gains by automakers. Denso, Japan's biggest auto-parts maker which is 23 percent owned by Toyota, advanced 60 yen, or 1.4 percent, to 4,330. Aisin Seiki, an affiliate of Toyota which makes transmissions and clutches, climbed 100 yen, or 2.4 percent, to 4,210.

Toyota probably moved closer in May to ending Ford Motor Co.'s 76-year reign as the second-biggest seller of automobiles in the U.S.

Toyota Sales

Ford's sales may have dropped in May for a seventh straight month and Toyota's probably rose, analysts surveyed by Bloomberg said. Through April, Ford's lead in U.S. sales had narrowed to 50,242 vehicles from 232,922 after the first four months last year. Automakers report U.S. sales later today.

Toyota forecast its smallest profit increase in a decade on May 9, citing slowing U.S. growth and investments in new factories. The carmaker said net income will probably rise by only 0.4 percent for this business year and North American sales gains may slow to 1.6 percent from 15.1 percent last year.

Nippon Mining, which made almost 80 percent of its sales from oil refining, advanced 29 yen, or 2.7 percent, to 1,099. Mitsui & Co., which trades industrial fuel and metals, jumped 70 yen, or 2.9 percent, to 2,470. Sumitomo Metal Mining Co., the nation's largest non-ferrous metal producer, rose 135 yen, or 4.9 percent, to 2,910.

Crude oil for July delivery advanced 0.8 percent to $64.01 a barrel yesterday and the July contract for copper jumped 2.8 percent. Oil was recently at $64.16 in after-hours electronic trading.

Dell's Earnings

Technology-related shares gained after Dell Inc., the world's No. 2 personal computer maker, posted earnings that beat analyst estimates.

Advantest Corp., the world's biggest maker of memory-chip testing equipment, climbed 80 yen, or 1.5 percent, to 5,280. NEC Corp., Japan's largest personal computer maker, added 6 yen, or 1 percent, to 626.

``Solid earnings in the U.S. will also encourage investors to buy technology shares and I bet those stocks will lead indexes once benchmarks start to have a big rally,'' said Ichiyoshi's Akino.

Dell surged as much as 8.3 percent in extended trading in New York after reporting that its first-quarter profit and sales exceeded analyst estimates and said it will cut 10 percent of its staff.

Ratings Raised

Mitsubishi Corp., Japan's biggest trading company which sells industrial fuel and coking coal, jumped 115 yen, or 3.9 percent, to 3,080 after Goldman, Sachs & Co. recommended investors buy the stock, citing a better outlook for prices of coking coal. The brokerage had a ``neutral'' rating before. Mitsubishi was the most actively traded stock by value, with 124.7 billion yen ($1.02 billion) in shares changing hands.

Kajima Corp., Japan's biggest general contractor by sales, surged 23 yen, or 4.6 percent, to 519. Taisei Corp., the nation's second largest, climbed 16 yen, or 4 percent, to 417. Credit Suisse Group raised its rating on the stocks to ``outperform'' from ``neutral'' and recommended investors increase their allocation of funds to contractors to the same proportion as in benchmarks.

Takeda Pharmaceutical Co., Japan's No. 1 drugmaker by revenue, gained 130 yen, or 1.6 percent, to 8,300. Nikko Citigroup Ltd. lifted its 12-month share-price estimate to 9,200 yen from 8,900 yen.

Nikkei futures expiring in June rose 0.5 percent to 17,950 in Osaka and gained 0.5 percent to 17,940 in Singapore.

The Nikkei advanced 2.7 percent this week, the first back- to-back weekly gains since February 23. The Topix added 3.1 percent.

Advantest Corp. (6857 JT)
Aisin Seiki Co. (7259 JT)
Denso Corp. (6902 JT)
Kajima Corp. (1812 JT)
Mitsubishi Corp. (8058 JT)
Mitsui & Co. (8031 JT)
NEC Corp. (6701 JT)
Nippon Mining Holdings Inc. (5016 JT)
Sumitomo Metal Mining Co. (5713 JT)
Taisei Corp. (1801 JT)
Takeda Pharmaceutical Co. (4502 JT)
Toyota Motor Corp. (7203 JT)

To contact the reporter for this story: Makiko Suzuki in Tokyo at Msuzuki13@bloomberg.net
Last Updated: June 1, 2007 02:39 EDT