Japanese Stocks Climb on CIT Loan, Goldman Sachs S&P Target

July 21 (Bloomberg) -- Japanese stocksadvanced after CIT Group Inc. received a loan to stave off bankruptcy and Goldman Sachs Group Inc. lifted its estimate for the Standard & Poor’s 500 Index on improving earnings.

Komatsu Ltd., the world’s second-largest maker of construction machinery, jumped 4.2 percent. Toyota Motor Corp., which generates 31 percent of its sales in North America, rose 1.7 percent. Mitsubishi Corp., Japan’s largest trading house, added 4.4 percent as metals prices advanced.

“CIT’s bridge financing and the target boost to the S&P 500 by Goldman Sachs spurred gains in the U.S. and will feed into the market here today,” saidFumiyuki Nakanishi, a Tokyo- based strategist at SMBC Friend Securities Co. “Confidence is rising that the worst is over for the U.S. economy.”

The Nikkei 225 Stock Average rose 176.20, or 1.9 percent, to 9,571.52 as of 9:47 a.m. in Tokyo, a fifth-straight climb. The broader Topix index added 2 percent to 895.59. Japan’s markets were closed yesterday for a holiday.

In New York, the Standard & Poor’s 500 Index climbed 1.1 percent to 951.13, the highest level since Nov. 5. CIT Group soared 79 percent. The lender said after the close of trading it reached a financing agreement with bondholders.

CIT Group, which provides financing to nearly 1 million small businesses, agreed to a $3 billion loan for 2.5 years from a group of its bondholders as it seeks to restructure its debt and avoid bankruptcy. CIT’s loan would pay 10 percentage points more than the three-month London interbank offered rate, according to people familiar with the situation.

David Kostin, U.S. strategist at Goldman, boosted his year- end estimate for the S&P 500 to 1,060 from 940, citing earnings reports that have been stronger than expected.

Election Campaign

Addtionally, Japan’s lower house of parliament will dissolve today for the start of campaigning ahead of an election to be held on Aug. 30. The opposition Democratic Party of Japan had twice the support of the ruling Liberal Democratic Party, according to a Kyodo News poll released July 19.

Komatsu added 4.2 percent to 1,468 yen. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, rallied 5.4 percent to 1,536 yen after KBC Groep NV boosted the stock to “hold” from “sell” on the view that the shares have become cheap in spite of a weak outlook.

The companies also got a boost after Merrill Lynch & Co., the brokerage bought by Bank of America Corp., lifted larger rival Caterpillar Inc. to “buy” on signs the construction market is turning around.

Toyota, Honda

Toyota rose 1.7 percent to 3,570 yen. Honda Motor Co., Japan’s second-largest automaker, advanced 2.6 percent to 2,540 yen. Denso Corp., the nation’s largest auto-parts maker, jumped 3.8 percent to 2,570 yen.

A measure of six metals traded on the London Metal Exchange, including copper and zinc, added 1 percent yesterday, a sixth consecutive advance. Oil rose to a two-week high yesterday in New York.

Mitsubishi Corp. rose 4.4 percent to 1,775 yen. Nippon Mining Holdings Inc., Japan’s biggest copper producer and an oil refiner, added 4.4 percent to 475 yen after the Nikkei newspaper said the company will likely swing to a 25 billion yen ($266 million) pretax profit for the latest quarter. It had a pretax loss of 31.3 billion yen in the previous three-month period.

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