The Wall Street Journal-20080215-Japan-s Stocks Bounce Back Big- Growth of GDP Spurs Largest Daily Gain in Six Years

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Japan's Stocks Bounce Back Big; Growth of GDP Spurs Largest Daily Gain in Six Years

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Japanese stocks surged 4.3% Thursday, logging their biggest one-day gain in nearly six years and propelling gains across Asia.

The buying was spurred by news that Japan's gross domestic product expanded at a 3.7% annual rate in the October-December quarter, trouncing expectations. Machinery makers such as Komatsu and exporters like Canon paced gains. Better-than-expected retail-sales data from the U.S. overnight also helped sentiment.

"I think so much bad news has been discounted into the current share prices, both external and internal, that any trigger can bring about this kind of rebound," said Masanaga Kono, strategist at SG Asset Management in Tokyo. "More than the domestic GDP numbers, the rally on Wall Street has been very encouraging."

The Nikkei Stock Average of 225 companies finished up 558.15 points at 13626.45, its high for the session. The Nikkei is down 11% this year, however. The broader Topix index climbed 3.7% to 1332.44.

Mr. Kono said economic weakness in the previous quarter as well as the year earlier set the stage for growth, and he said the economy's "artificial rebound" may continue. "Last year, the latter half was extremely weak, particularly for housing starts, which declined by more than 40% because of tightened government regulation," he added.

The data came ahead of today's Bank of Japan decision on interest rates. Many analysts expected the central bank to leave its benchmark short-term rate at 0.5%.

The strong performance of stocks in Tokyo fired up other regional markets.

In HONG KONG, the Hang Seng Index extended its winning streak into a third session, rising 3.7% to 24021.68, although it is down 13.6% this year. The Hang Seng China Enterprises Index surged 4.6% to 13550.99.

In MUMBAI, India's Sensitive Index jumped 4.8% to 17766.63, adding to Wednesday's advance, which followed five straight days of losses. The Sensex is down 12.4% on the year.

In SINGAPORE, the Straits Times Index climbed 3.3% to 3045.59. Investors ignored official data showing that the economy shrank 4.8% during the October-December period from the previous quarter, while inflation continued to grow as the cost of health care, housing and food increased. The government also lowered its 2008 growth estimate to 4% to 6% from 4.5% to 6.5%.

Elsewhere, China's Shanghai Composite added 1.4% to 4552.32, and Australia's S&P/ASX 200 index climbed 2.6% to 5684.80. New Zealand's NZX 50 index inched up 0.1% to 3550.41, and South Korea's Kospi jumped 4% to 1,697.45.

The gains in Shanghai came after an adviser to the Chinese central bank said there could be adjustments to the bank's tight monetary policy to ease the likely impact from recent changes in the global and local economic situation.

In the TOKYO trading, shares of machinery makers rallied, with Komatsu soaring 7.9%, while Fanuc, a maker of industrial robots, jumped 5.1%. A recently weakened yen lifted exporters; Canon advanced 5.1%, and Honda Motor gained 5.4%.

Financial shares bounced from a string of weak finishes recently, with shares of National Australia Bank rising 3.3% in Sydney, Mizuho Financial Group climbing 4.2% in Tokyo, Cathay Financial Holding rising 4.6% in Taipei, HSBC Holdings jumping 3.4% in Hong Kong and Oversea-Chinese Banking Corp. adding 3% in Singapore.

Shipping and shipbuilding stocks gained after Wall Street's higher finish Wednesday. STX Shipbuilding surged 12% in Seoul, Mitsui O.S.K. Lines advanced 5.5% in Tokyo and Pacific Basin Shipping rose 5.5% in Hong Kong.

Shares of Japan Airlines gained 1.6% on plans to sell its maintenance centers at Tokyo's Haneda Airport for 42.2 billion yen ($389.8 million) as the carrier steps up efforts to reduce costs and scale back real-estate holdings.

Shares of Citic Securities climbed 1.4% in Shanghai on unconfirmed reports it is seeking to renegotiate the terms of its planned $1 billion investment in Bear Stearns Cos. following the continued slide in the share price of the Wall Street firm since the original agreement was reached.

Shares of insurance group AMP and construction group Leighton Holdings finished lower in Sydney on weaker-than-expected earnings and outlook. AMP stock slipped 0.4%, while Leighton sank 5.5%.

Stock exchange operator ASX's declined 0.8%, despite half-yearly profit rising more than 50%, on concern that trading activity might slow.

In Europe, markets eked out gains as UBS's earnings report offset strength from food and drink companies.

In ZURICH, UBS tumbled 8.3% as the Swiss banking giant, Europe's worst-hit bank in the U.S. subprime-mortgage crisis, offered a bleak outlook for 2008 as it confirmed more than $18 billion in write-downs on investments gone bad.

"We still think further write-downs are likely in at least the first quarter, further impairing confidence and raising the risk of market share losses," Deutsche Bank analyst Matt Spick said.

In LONDON, the FTSE 100 Index closed flat at 5879.30. Diageo rose 4.6% as the spirits company posted a 9% rise in first-half net profit on robust sales of its premium brands. The company reiterated its full-year profit guidance.

In FRANKFURT, shares of Commerzbank fell 6.6% as it said a subprime- related write-down hurt fourth-quarter net profit, but it gave an upbeat outlook for 2008.

"The turmoil in equity markets is purely driven by financials and yet to reach the main street and affect the corporate sector excluding financials," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities.

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Jeannie Clarke contributed to this article.