Japan's Stocks Fluctuate as Banks Rise, Trading Houses Drop on Commodities

Japanese stocks fluctuated as banks advanced following a brokerage’s investment recommendation while commodities traders declined after oil and metal prices fell.

Mizuho Financial Group Inc., Japan’s third-biggest bank by market value, jumped 2 percent as Nomura Holdings Inc. recommended the stock. Mitsubishi Corp., the nation’s top trading company, lost 0.3 percent. Sharp Corp., the country’s largest maker of liquid-crystal displays, advanced 3.4 percent after the Nikkei newspaper said the company will invest 100 billion yen （$1.19 billion） for LCD production. Nomura Real Estate Holdings Inc., a property developer, climbed 6.6 percent after raising its profit forecast.

The Nikkei 225 Stock Average was little changed at 10,305.47 as of 10:25 a.m. in Tokyo after rising as much as 0.2 percent and falling 0.1 percent. The broader Topix index was also little changed at 904.23. For the week, the Nikkei rose 0.9 percent while the Topix is up 1.8 percent.

“We’re seeing the global economy is gradually recovering,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. However, “some technical data shows the market is overheated and that weighs on the market.”

The 25-day Toraku index, a measure of daily stock winners and losers on the Topix, was 147 yesterday. A level of more than 120 suggests to some investors the market is poised to fall. The index has remained above 120 since Dec. 2.

Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.6 percent yesterday to 1,242.87, its highest close since September 2008, when Lehman Brothers Holdings Inc. collapsed.

U.S. Jobless Claims

The number of U.S. workers filing first-time claims for unemployment benefits unexpectedly declined by 3,000 to 420,000 last week, the lowest in three weeks, Labor Department figures showed. Economists in a Bloomberg survey projected a median rise in claims to 425,000.

Builders in the U.S. began work on more homes in November for the first time in three months, showing the industry is struggling to recover. Housing starts climbed to a 555,000 annual rate, up 3.9 percent from October’s 534,000 pace that was higher than initially estimated, Commerce Department figures showed. The median estimate in a Bloomberg News survey called for a 550,000 pace.

Banks rose after Mizuho Financial Group had its rating increased to “buy” from “neutral.” Mizuho gained 2 percent to 153 yen, on course for the highest close since June 25. Mitsubishi UFJ Financial Group Inc., the nation’s largest bank by market value, advanced 1.4 percent to 441 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, rose 1.5 percent to 2,898 yen.

Yields Exceed Bonds

The Topix slid 0.4 percent through yesterday in 2010, compared with gains of 11 percent by the S&P 500 and 9.3 percent by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark were valued at 15.7 times estimated earnings on average at yesterday’s close, compared with 14.6 times for the S&P 500 and 12.3 times for the Stoxx 600.

The Topix’s average earnings yield, or estimated earnings per share divided by the stock price, is 5.1 percentage points more than the 10-year government bond yield. That exceeds the five-year average of 3.2 percent and is near the highest since October 2008 when Lehman collapsed, freezing credit markets.

Nomura Real Estate

Developers had the second biggest advance behind banks among the Topix’s 33 industry groups after Nomura Real Estate raised its profit forecast. The company projected its operating profit for the year ending March 31 will reach 42 billion yen, up 20 percent from its earlier projection. Nomura Real Estate surged 6.6 percent to 1,399 yen. Mitsubishi Estate Co., the country’s biggest developer by market value, climbed 1.6 percent to 1,490 yen. Mitsui Fudosan Co., the second-largest, rose 1.2 percent to 1,578 yen.

Mitsubishi lost 0.3 percent to 2,213 yen. Mitsui & Co., which counts commodities as its largest source of profit, sank 1.3 percent to 1,325 yen. Sumitomo Corp. retreated 0.9 percent to 1,176 yen.

Crude oil for January delivery lost 1 percent to $87.70 a barrel in New York yesterday, the lowest settlement since Dec. 1. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 0.7 percent yesterday, a third consecutive decline.

Sharp jumped 3.4 percent to 856 yen, the second-biggest increase in the Nikkei. The company will invest 100 billion yen for a liquid-crystal display production line in Mie prefecture, Japan, to supply screens primarily for Apple Inc.’s iPhone, the Nikkei newspaper reported.