Japan stocks jump on recovery hopes

Japanese stocks jumped Monday, buoyed by hopes for a global economic recovery and gains in exporters on the back of a softening yen.

The benchmark Nikkei 225 stock surged 342.85 points, or 3.4 percent, to 10,581.05 after losing more than 1 percent Friday. The broader Topix index gained 2.4 percent to 970.27.

"Investors are upbeat as they see the global economy has emerged from the worst period, and is steadily recovering," said Masatoshi Sato, senior market analyst at Mizuho Investors Securities Co. Ltd.

Sato said investors turned optimistic following a better-than-expected rise in U.S. home sales for July, and Federal Reserve Chairman Ben Bernanke's comments Friday that the world's largest-economy is on the verge of recovery.

The National Association of Realtors said Friday U.S. sales of existing homes rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June.

It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

"While the surge in July home sales was mainly due to a tax credit program, the figure was nonetheless clear evidence that the U.S. economy is heading toward a recovery," said Sato.

The analyst said the market also got a boost from a weakening yen, which helps exporters as it boosts the value of their repatriated profits.

He said some investors stayed on the sidelines ahead of Japan's general elections on Aug. 30. Newspaper polls have forecast the country's biggest opposition party, the Democratic Party of Japan, is set to win more than 300 seats in the 480-seat powerful lower house of parliament.

It would mean an end to the rule of Prime Minister Taro Aso's Liberal Democratic Party, which has governed Japan for more than half a century.

Among blue chips, Toyota rose 2.3 percent to 4,070 yen. Honda Motor Co. gained 3.2 percent to 3,050 yen.

Sony was up 3.1 percent at 2,520 yen. Panasonic Corp. increased 2.4 percent to 1,489 yen.

In currencies, the dollar was trading at 94.76 yen in Tokyo late Monday up from 94.38 yen in New York late Friday. The euro stood at $1.4323 from $1.4341.