Tokyo - Japan’s Topix index rose the most in a week, reversing earlier losses, as construction companies led the advance and Hitachi Ltd. surged on earnings.
Kumagai Gumi Co. jumped 12 percent, leading a rally among building stocks.
Hitachi, a maker of electronic equipment and machinery, jumped 8.4 percent after preliminary first-half results beat forecasts. Mazda Motor Corp., an automaker that gets 73 percent of its sales abroad, added 2 percent as the yen pared yesterday’s gain in the last hour of equity trading.
Panasonic Corp. added 1.5 percent on a report the electronics company is set to halve its chip-making workforce.
The Topix rose 0.6 percent to 1,203.35 at the close in Tokyo, the biggest rally since October 17, after dropping as much as 0.8 percent.
The Nikkei 225 Stock Average gained 0.4 percent to 14,486.41 after sliding 1.1 percent.
The Topix yesterday slumped the most since October 2 after China’s money-market rates jumped and the yen gained 0.8 percent against the dollar.
“The yen is moving in a favorable direction today, helping stocks pare yesterday’s drop,” said Masaaki Yamaguchi, equity market strategist at Nomura Holdings Inc., Japan’s biggest brokerage by market value.
“Plus, I think earnings expectations are basically strong.”
The Topix added just 0.8 percent this month, trailing all but one of its 23 developed-market peers.
Japanese shares are still the best performers this year among the markets, amid optimism Prime Minister Shinzo Abe’s policies and unprecedented monetary easing from the Bank of Japan will lead the country out of deflation.
The Topix Construction Index rose 1.7 percent, the most among the broader gauge’s 33 industry groups.
Kumagai Gumi soared 12 percent to 303 yen. Raito Kogyo Co., a Tokyo-based construction firm, jumped 6.5 percent to 784 yen.
About 560 companies on the 1,744-member Topix report results from today through October 31, with earnings season peaking next week, according to data compiled by Bloomberg.
Profit per share at companies on the gauge is expected to jump 56 percent from the previous quarter, analyst estimates compiled by Bloomberg show.
Hitachi jumped 8.4 percent to 659 yen, the biggest advance since March 2011 and the most on the Nikkei 225, after reporting preliminary net income of 32 billion yen, above its forecast of 15 billion yen.
The company is scheduled to post final results on October 29.
Exporters gained as the yen fell against 15 of its 16 major counterparts and dropped 0.1 percent to 97.44 per dollar.
Mazda rose 2 percent to 451 yen.
Nissan Motor Co., a carmaker that gets 34 percent of its revenue in North America, advanced 0.9 percent to 1,006 yen.
Panasonic added 1.5 percent to 936 yen after the Nikkei newspaper reported it will halve its chip-making workforce to about 7,000 by fiscal 2014 and plans to sell some plants.
In another support for stocks, the preliminary 50.9 reading for a China Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics compared with a 50.4 median estimate from analysts surveyed by Bloomberg News.
Futures on the Standard & Poor’s 500 Index increased 0.3 percent today. The equity gauge lost 0.5 percent in New York yesterday, falling for the first time in six days as forecasts at companies from Caterpillar Inc. to Broadcom Corp. disappointed investors.
Among stocks that fell, Komatsu Ltd., Japan’s largest construction-machinery maker, slipped 2.1 percent to 2,322 after US bellwether Caterpillar said sales and profit will decline.
Japan Exchange Group Inc. dropped 2.7 percent to 2,159 yen. Morgan Stanley MUFG Securities Co. cut the bourse operator’s rating after its profit forecast missed estimates yesterday.
The Topix traded at 1.26 times book value today, compared with 2.56 for the S&P 500 and 1.79 for the Stoxx Europe 600 Index yesterday. The Japanese gauge’s 30-day historic volatility was at 14.87 today, its lowest since January. - Bloomberg News