5:00AM New York, 7:00 PM Tokyo - Stalemate over Bank of Japan successor persists. NTT Corp. revises downwards annual profit forecast.

Japan’s stock averages snapped a four-day decline to close up after the cost of protecting Japan’s corporate debt from default declined and on brokerage upgrade of insurance companies on speculation profit will rise.

In Tokyo trading Nikkei 225 rose 1.5% or 176.65 to 11,964.16, and the broader Topix Index increased 1.2% or 13.98 to 1,163.63.

In the first section of the Tokyo Stock Exchange 10.2 billion shares worth 1 trillion yen were traded and in the second section 354 million shares valued at 4.9 billion yen changed hands.

Of the Nikkei 225 index shares 168 advanced, 50 declined and 7 were unchanged. Sompo Japan Insurance led gainers in the Nikkei 225 index shares after Deutsche Bank said insurance companies are likely to report better than estimated earnings in the current fiscal year as the yen strengthens.

Other insurance companies rose as well.

Decision paralysis for the governor of the Bank of Japan

The Nikkei news reported today on its website that a vacuum looms at the Bank of Japan as the standoff between the ruling party and the opposition Democratic Party of Japan is likely to continue after Prime Minister Yasuo Fukuda proposed ex-finance ministry official Koji Tanami.

The online news edition indicated that the DPJ was likely to reject Tanami’s nomination because of his previous links with the finance ministry.

Incumbent BOJ Governor Toshihiko Fukui’s term expires tomorrow, raising the specter of a vacuum at the central bank at a time when economic growth is slowing and inflation is rising.

Cost of protecting Japan’s corporate debt declines

Bloomberg news reported today that according to Morgan Stanley and the Markit iTraxx Index, which is used to gauge the cost of protecting Japan’s corporate debt from default, declined 16 basis points to 224.

Gainers & Losers

Sompo Japan Insurance led the advancers in the Nikkei 225 index shares with an increase of 8.68% followed by rises in Advantest Corp. of 7.59%, in Sumitomo Osaka of 6.81%, in Mitsui Sumitomo Insurance Co of 6.62%, and Sky Perfect JSAT of 6.33%.

Sompo Japan Insurance and other insurance companies gained after Deutsche Bank raised its rating on the industry on expectations the sector will recover this fiscal year as the rising yen affects the profitability of manufacturers.

Sumitomo Metal Mining led decliners in the Nikkei 225 index shares with a fall of 7.90% followed by losses in Toho Zinc Co Ltd. of 7.77%, in Marubeni Corp of 5.47%, in Inpex Holdings of 5.04%, and Mitsubishi Corp. of 3.64%.

Sumitomo Metal Mining fell as commodity prices declined. Gold prices declined 3.7% from $1,032.70 per ounce yesterday to $994.38.

Also copper for June delivery plummeted 4% after fears that a recession in the U.S. will weaken demand.

Mitsui & Co shed 2.34% and Nippon Mining House edged down 1.94% as a result.

The yen rose to 97.14 from 97.33 yesterday against the dollar on speculation the Federal Reserve will cut its key rate at its policy meeting today. Komatsu Ltd fell 0.99% and Sharp Corp slipped 0.72%.