Tokyo: Topix rises as Japanese airlines gain on cheaper fuel outlook

[TOKYO] Japan's Topix index rose for the first time in three days as airlines led gains on the outlook for cheaper fuel as oil traded near an 11-year low. Toshiba Corp. tumbled for a second day.

The Topix index gained 0.2 per cent to 1,533.60 at the close in Tokyo, swinging from an earlier 0.3 per cent drop. The Nikkei 225 Stock Average fell 0.2 per cent to 18,886.70. Brent crude halted a slide near the lowest price since mid-2004, while metal prices recovered after China signaled it may boost stimulus to support growth. Japanese markets will be closed Wednesday for a national holiday.

"Ahead of the holidays, it's hard to expect to receive a decent return for taking risk," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo.

"Japanese stocks are no longer relatively expensive, so I wouldn't expect big declines. But they're also unlikely to move much higher."

Toshiba fell 12 per cent, bringing its two-day decline to 21 perc ent, after the electronics maker forecast a record net loss of 550 billion yen (S$6.4 billion) for the current fiscal year as it seeks to cope with the fallout from its on-going accounting scandal. It posted the biggest decline on the Nikkei 225.

"Toshiba's stock price has fallen by more than half since the end of March, and that is triggered stop-loss selling by foreign and domestic institutional investors," said SBI's Mr Fujimoto.

E-mini futures on the Standard & Poor's 500 Index rose 0.3 per cent after the underlying measure added 0.8 per cent on Monday, surging in the final minutes of trading and halting the biggest two-day rout in three months.

China's leaders signaled they will take further steps to support growth, including widening the fiscal deficit and stimulating the housing market. Copper advanced Monday to the highest in more than a month, while oil slid amid speculation producers will exacerbate a supply glut as they fight for market share.

"This shows Chinese authorities are recognizing the need for more action," said Seiichiro Iwamoto, a senior fund manager at Mizuho Asset Management Co in Tokyo. "It's a relatively positive development." Electronic parts maker Mitsumi Electric Co surged 9.9 per cent, rising for a second day, after announcing a plan to merge with Minebea Co in 2017. Shares of Minebea fell 4.1 per cent.

Pharmaceutical companies gained. Eisai Co added 1 per cent after Goldman Sachs Group Inc raised its rating. PeptiDream Inc jumped 7 per cent after announcing a research collaboration with Genentech Inc.

McDonald's Holdings Co Japan Ltd sank 7.9 per cent after the Nikkei reported its US parent is considering selling as much as a third of its stake in the Japan unit.

Airlines and transport stocks posted the biggest gains among the 33 industry groups on the Topix index. Japan Airlines Ltd rose 2.7 per cent and West Japan Railway Co jumped 3.9 per cent.

BLOOMBERG