In Tokyo trading Nikkei 225 rose 1.64% or 281.09 to 17,458.98, while the broader Topix index climbed 1.2% or 19.34 to 1,677.52.

Bank of Japan today held the key lending rate at 0.5% by 8 to 1 vote at the conclusion of its two-day meeting. Atsushi Mizuno, the lone dissenter voted for an increase for the fourth time.

According to the bank’s report on recent economic and financial developments released after the meeting, business sentiment has remained favorable although it has become cautious in some sectors. Private consumption also has been leveraged by the moderate rise in household income. Public investment is however projected to be on the downside.

Rating agency Moody’s, upgraded sovereign debt lifting the sentiment in the market. However, Moody’s has come under fire in the U.S. for its questionable practices in the subprime bonds rating. The Finance Ministry has forecasted primary deficit for the current fiscal year to drop to 4.4 trillion yen from 11.2 trillion. The new administration led by the Prime Minister Fukuda has said that he is committed to balancing the budget within five years.

Cabinet Office said today the total value of machine orders received by 280 manufacturers operating in Japan increased by 7.1% to 2.77 trillion yen in August from the previous month on a seasonally adjusted basis when orders had slumped 2.5 trillion-yen. However, private sector machinery orders which can be volatile fell by 7.7% to 1.4 trillion yen. Machine orders for manufacturing sector also fell 8.6% to 447 billion yen, while those from overseas surged 23% in August to 1.2 trillion yen after falling 10.8% in July.

Ministry of Finance said today the current account surplus for August soared for the eighth month by 42.1% to 2.081 trillion from a year earlier on firm exports to Asia and Europe.

Merchandise trade surplus surged 185.2% to 892.2 billion yen as exports increased 14% to 6.7 trillion yen at a higher rate than imports increase of 4.3% to 5.7 trillion yen. Imports were mainly spurred by steel and automobile exports after the July 16 earthquake in Niigata Prefecture that had caused supply disruptions to industry.

Balance of trade in goods and services rose 316% to 684 billion yen from last year, while income surplus increased 7.3% to 1.4 trillion yen on rising interest income and dividends from overseas investments.


Of the Nikkei 225 stocks 168 gained, 49 slipped, and 8 traded unchanged. Hitachi Zosen led the gainers with a rise of 7.02% on increases in freight charges of metals and commodities.

Daily trading volume on the first section was reported at 8.5 billion shares valued at 1.21 trillion yen compared to 1.7 billion shares in the previous session. In the second section trading volume was 574 million shares worth 37 billion yen compared to 80 million shares a day ago.

Crude oil prices firmed for the second day, jumping 1% to $81.30 per barrel. Mitsubishi Corp added 4.26%, Nippon Oil Corp climbed 2.14% and Inpex Holdings edged up 3.31%.

Metal prices also gained as nickel copper rose 1.5%, nickel jumped 2.6% and zinc soared 2.3%. Nippon Mining Holdings gained 2.21% and Sumitomo Metals Mining firmed 4.09 as a result.

Of the index shares Hitachi Zosen led gainers, rising 7.02% followed by gains in Mitsumi Electric Co Limited of 6.08%, in NGK Industries of 5.96%, in Yahoo Japan Corp of 5.94% and Marubeni Corp of 5.75%.

Hitachi Zosen and other ship builders soared as freight charges of metals and commodities increased. The Baltic Dry Index, which measures the price increases, edged up 3.6%, gaining 130% this year. Nippon Yusen climbed 5.11% and Mitsui Engineering & Shipbuilding Company Limited gained 1.60%.

Nippon Suisan led declining shares, slipping 3.86%, followed by losses of 3.64% in Casio Computer, 3.62% in Matsushita Electric Works, 2.99% in Chugai Pharmaceutical Company and 2.67% in T&D Holding Inc.

Mitsubishi Heavy Industries and Kawasaki Heavy Industries fell 1.24% and 2.20% after Boeing announced today a six-month delay in initial deliveries of 787 Dreamliner due to parts shortages and integrating various assemblies. Mitsubishi supplies parts and assemblies for wings worth $6 billion for the Dreamliner project.

Sony Financial Holdings gained 4% on the first trading day today in the largest initial public offering for the year in Japan. The offering was priced at 400,000 yen and raised 320 billion yen. The stock jumped to 424,000 yen at its peak but settled at 415,000 yen at close. The financial company offers life and auto insurance and operates an online bank. The rival insurance company T&D Holdings, the only other insurance company traded on the exchange is trading at twice the market value of Sony Financial but is growing at a slower pace than Sony Financial.