5:00AM New York, 7:00PM Tokyo - Japan government says economy is at a standstill.

Stocks in Japan gained on growing speculation that subprime loans losses are on the wane and on strong earnings from Caterpillar and NEC Corp.

In Tokyo trading Nikkei 225 rose 1.63% or 220.1 at 13,696.55, and the broader Topix Index increased 2.1% or 27.45 at 1,331.51.

In the first section of the Tokyo Stock Exchange 8.5 billion shares worth 1 trillion yen was traded and in the second section 269 billion shares valued at 6.3 billion yen changed hands.

Of the Nikkei 225 stocks 153 gained, 63 declined and 9 were unchanged. Honda Motor Co. led advancers in the index shares with a rise of 8.82% after exporters rose on a weakening yen against the dollar.

Tertiary Industry Index drops 1.7% in February

The Ministry of Economy, Trade and Industry reported today in its Indices of Tertiary Industrial Index that the Indices of Tertiary Industry Activity fell by 1.7% in February to a seasonally adjusted 108.4.

According to the report, industries that mainly contributed to the drop are Services falling 4.1%; finance and insurance declining 3.6%; real estate dropping 4.8%, wholesale, retail and trade slipping 1%, and information and communications edging lower 1.6%; eating, drinking and accommodation fell 1.7%; and compound services and transport falling 4.2% and 0.8% respectively.

However, industries that contributed to the increase were electricity, heat supply and water rising 4.3% and medical, healthcare and welfare advancing 0.9%.

Japan cut its assessment on the economy

The Nikkei news reported today that Japan’s finance ministry today slashed its assessment on the economy for the first time in more than six years, citing that the economy is currently “at a standstill.""""

Gainers & Losers

Honda Motor Co. led advancers in the Nikkei 225 index shares with a rise of 8.82% followed by rises in NEC Corp. of 7.34%, in Kubota Corp. of 7.14%, in Komatsu Ltd of 6.96%, and IHI Corp of 6.40%.

Exporters rose after the yen weakened against the dollar trading at 103.87 on rising speculation that sub-prime related losses are on the wane.

Canon rose 6.11%, Sony increased 5.6% and Toyota advanced 5.09%.

Komatsu Ltd gained after rival Caterpillar reported that first quarter profits 13% to $922 million on robust equipment sales in emerging markets such as China and the Middle East. Komatsu gained 195 yen of 7% to close at 2,995 yen.

Sumitomo Osaka led decliners in the Nikkei 225 index shares with a drop of 6.15% followed by losses in Marui Group of 4.90%, in Isetan Mitsukoshi Holdings of 4.32%, in Inpex Holdings of 3.20%, and West Japan Railway of 2.82%.Kubota Corp added 7.2% or 48 yen to close at 720 yen.

Inpex fell despite oil prices rising to above $117 per barrel after OPEC said it will not boost supply. Recently the organization said global markets were fundamentally well supplied.

Retailers also fell as well after the ministry of finance cut its rating on the economy for the first time in six years. Front Retailing fell 2.40% and J Front Retailing slumped 1.99%.

NEC surged 7% to 468 yen after it reported 2007 operating profit nearly doubled to 150 billion yen.