Japanese Stocks Climb on Outlook for Corporate Profit; Banks Lead Advance

Japanese stocks rose after Citigroup Inc. reported profit that exceeded analysts’ estimates, boosting the outlook for corporate earnings, and as oil prices gained.

Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, climbed 1.6 percent. Nintendo Co., the world’s biggest maker of portable video-game players, advanced 1.5 percent after the stock was rated “overweight” at JPMorgan Chase & Co. Inpex Corp., Japan’s No. 1 oil-explorer, rose 0.9 percent, after oil prices increased.

The Nikkei 225 Stock Average rose 0.7 percent to 9,563.92 as of 9:36 a.m. in Tokyo. The broader Topix index gained 0.7 percent to 836.58 with almost three stocks advancing for each that fell.

“Market sentiment is improving,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Expectations for corporate earnings in the financial sector are rising after the better-than-expected results at Citigroup.”

The Topix has declined 8.2 percent in 2010, compared with gains of 6.2 percent by the S&P 500 and 5 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 14.9 times estimated earnings, compared with 14.1 times for the S&P and 12.3 times for the Stoxx.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The index rose 0.7 percent yesterday in New York to the highest level since May 3 following Citigroup’s results and as an unexpected drop in U.S. industrial production added to signs the Federal Reserve will help stoke the economic recovery.

Banks Lead Gains

Output at factories, mines and utilities fell 0.2 percent in September, according to figures from the Fed, the first decline since the recession ended in June 2009.

Banks were the biggest support for the Topix’s gain. Mitsubishi UFJ rose 1.6 percent to 388 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest publicly traded bank, gained 1.1 percent to 2,387 yen. Mizuho Financial Group Inc., the No. 3, climbed 2.6 percent to 120 yen.

Upward revisions in corporate earnings are expected ahead of mid-term company reports because of lower credit costs and improvement in revenue, Hironari Nozaki, an analyst at Citigroup Global Markets Japan Inc., wrote in a Japanese-language report dated today. Next week is Japan’s busiest period for earnings statements, according to Bloomberg data.

Inpex increased 0.9 percent to 456,000 yen. Japan Petroleum Exploration Co., the nation’s second-biggest oil driller, rose 1.4 percent to 3,385 yen. JX Holdings Inc., Japan’s largest copper producer, jumped 2.1 percent to 498 yen.

Crude oil for November delivery increased 2.3 percent yesterday in New York to settle at $83.08 a barrel, the steepest gain this month. The London Metal Exchange Index of six industrial metals, including copper and aluminum, rose 0.5 percent yesterday.

Nintendo advanced 1.5 percent to 21,170 yen. The company was rated “overweight” in new coverage by Hiroshi Kamide, an analyst at JPMorgan Chase & Co. Kamide set a 12-month share price estimate at 27,000 yen.