Japanese Stocks Rebound After Three-Day Slump, Led by Insurance Companies

March 18 (Bloomberg) -- Japan's stocks advanced for the first time in four days after recent declines spurred investors to buy into the market.

Aioi Insurance Co. and Nipponkoa Insurance Co. Japan's fourth- and fifth-largest casualty insurers, leapt after Deutsche Bank AG said the shares had become cheap. Financial-services provider Orix Corp. and consumer lender Takefuji Corp. jumped after saying they will buy back shares.

The Nikkei 225 Stock Average added 172.05, or 1.5 percent, to 11,959.56 at the 11 a.m. break. The broader Topix index rose 11.02, or 1 percent, to 1,160.67, as 27 of its 33 industry groups advanced.

``Japanese stocks have become cheap, and they won't stay that way forever,'' said Kiyoshi Ishigane, who helps oversee $61 billion in assets at Mitsubishi UFJ Asset Management Co. in Tokyo. ``Shareholders have become increasingly impatient as stocks plunged. Companies have to show some effort to bolster their share prices.''

The Topix's relative strength index, a moving average based on gains and losses, dropped to 29.7 yesterday. A reading below 30 signals to some investors shares are poised to rise. The Topix lost 22 percent this year to yesterday's close.

Aioi surged 8.3 percent to 550 yen, while Nipponkoa climbed 5.5 percent to 766 yen. T&D Holdings Inc., Japan's second-largest publicly traded insurer, climbed 8.8 percent to 5,440 yen. The Topix Insurance Index advanced 6.3 percent, the biggest gain among all industry groups on the Topix.

`Relatively Attractive'

Tatsuo Majima, a Tokyo-based analyst at Deutsche Bank, boosted Aioi to ``buy'' from ``hold'' and Nipponkoa to ``hold'' from ``sell,'' saying recent declines in the stocks have made them cheap.

``The insurers' earnings will recover this fiscal year,'' Majima said today by phone. ``As manufacturers' profits are expected to drop because of the stronger yen against the dollar, insurers are relatively attractive investments.''

Orix climbed 3.7 percent to 12,380 yen, while Takefuji, the nation's third-largest consumer lender by market value, rose 3.7 percent to 2,125 yen. Orix and Takefuji said they would buy back shares, which have fallen 35 percent and 22 percent respectively this year.

Japan Airlines Corp., Asia's largest carrier, added 3.6 percent to 257 yen. Credit Suisse Group boosted its rating on the stock to ``neutral'' from ``underperform'' on prospects for the airline's international business class service and fuel savings from the use of smaller aircraft.

Nikkei futures expiring in June advanced 1.2 percent to 11,890 in Osaka and gained 0.6 percent to 11,875 in Singapore.