June 11 (Bloomberg) -- Japanese stocks advanced after a report on gross domestic product showed the nation's economy grew at a faster pace in the first quarter than initially estimated, boosting confidence in the outlook for domestic businesses.
Banks led gains. Mizuho Financial Group Inc. climbed to the highest in more than four months.
Investors welcomed confirmation of stronger growth after reports during the last two weeks on industrial production, retail trade and machine orders missed economist forecasts. The report also showed consumer spending expanded at a 3.1 percent annualized rate.
Toyota Motor Corp. led exporters higher after the yen weakened the most in six weeks against the dollar on June 8, increasing the value of their dollar-denominated sales.
The GDP report is ``positive because it will relieve people's cautiousness toward the Japanese economy,'' said Soichiro Monji, who helps oversee about $47 billion at Daiwa SB Investments Ltd. in Tokyo. ``Investors regard banks as domestic demand-related. In this sense, stronger private consumption should favor the banking stocks.''
The Nikkei 225 Stock Average advanced 84.15, or 0.5 percent to 17,863.24 at the 11 a.m. break in Tokyo. The broader Topix index climbed 10.34, or 0.6 percent, to 1766.50.
Insurance companies jumped on speculation the GDP report will give the Bank of Japan reason to boost interest rates, allowing insurance companies to make better returns on their bond investments.
Faster Growth
Mizuho, Japan's second-largest bank by assets, added 8,000 yen, or 0.9 percent, to 907,000, the highest since Jan. 23. Mitsubishi UFJ Financial Group Inc., the biggest, jumped 30,000 yen, or 2.2 percent, to 1.42 million. Sumitomo Mitsui Financial Group Inc., the third largest, climbed 10,000 yen, or 0.8 percent, to 1.2 million.
Japan's economy expanded at a 3.3 percent annualized rate in the three months ended in March, the Cabinet Office said. That exceeded the median forecast of 3.2 percent growth by 27 economists surveyed by Bloomberg. The government's original estimate was for 2.4 percent growth.
``The revised GDP figure will improve investor sentiment even though many people had already expected the better numbers,'' said Seiichi Suzuki, a strategist at Tokai Tokyo Securities Co. in Tokyo. ``Growth is still being supported by capital spending, so companies linked to overseas demand and large domestic shares such as banks are attracting some buying.''
Toyota, which had 63 percent of its sales outside Japan last fiscal year, climbed 90 yen, or 1.2 percent, to 7,560. Sony Corp., which makes about 70 percent of its sales outside Japan, advanced 70 yen, or 1.1 percent, to 6,660.
Denso Gains
The yen fell 0.6 percent to 121.73 against the dollar on June 8 in New York. That was the biggest drop since April 26. A weaker yen increases the value of Japanese exporters' dollar- denominated sales when converted back into local currency, while their products become more competitive abroad. Japan's currency recently changed hands at 121.55 against the dollar.
Sony also rose after the Taiwan's Commercial Times newspaper said the company has started outsourcing production of its 32-inch liquid-crystal display televisions to Hon Hai Precision Industry Co. for the first time.
Millea Holdings Inc., the nation's largest property and casualty insurer by market value, jumped 130 yen, or 2.4 percent, to 5,510. Sompo Japan Insurance Inc., the No. 3 non-life insurer, rose 42 yen, or 2.6 percent, to 1,660. Nomura Securities Co. lifted its rating on Sompo to ``buy'' from ``neutral'' today.
Higher Interest Rates?
Faster growth will be encouraging for Bank of Japan Governor Toshihiko Fukui and his policy-making colleagues, who gather in Tokyo later this week for a regular monetary policy meeting.
``The Bank of Japan should be gaining more confidence with today's revision, which increased the probability of the next rate hike in August,'' said Tomoko Fujii, head of economics and strategy for Japan at Bank of America N.A. in Tokyo.
Insurance companies keep most of their investments in bonds. Once a bond matures, they can reinvest the principal in a higher-yielding issue if rates are rising.
Denso Corp., Japan's biggest maker of diesel engine parts, gained 110 yen, or 2.5 percent, to 4,490. The company plans to start making pollution-curbing electronic fuel-injection devices for a Chinese automaker as early as 2009, the Nikkei newspaper said yesterday.
CyberAgent Inc., an internet services provider, soared 8,300 yen, or 11 percent, to 82,000. The stock was rated ``buy'' in new coverage by Sumito Takeda, an analyst at UBS AG in Tokyo. The company may be able to take a leading position in the weblog market and profit from that status, the analyst wrote.
Nikkei futures expiring in June rose 0.6 percent to 17,890 in Osaka and gained 0.5 percent to 17,880 in Singapore.
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