5:00AM New York, 7:00PM – Stocks in Japan rose after leading indicator data suggested steady economic expansion driven on investment.

Japan stock averages rose despite fears of credit market losses spurred by commodity stocks and a government report that economic growth is likely to continue notwithstanding slowing growth in the U.S.

In Tokyo trading Nikkei 225 gained 1.18% or 157.01 at 13,450.23 and the broader Topix Index increased 1.3% or 16.69 to 1,305.63.

In the first section of the Tokyo Stock Exchange 8.2 billion shares worth 977 billion yen were traded and in the second section 209 million shares worth 2.9 billion yen changed hands.

Nippon Mining House led gainers in the Nikkei 225 index shares with a rise of 8.9% on the rise in commodities prices.

Leading Index rises in February

The Cabinet Office reported today its Indexes of Business Conditions that the Leading Index gained from 36.4 in January to 50 in February, while the Coincident Index edged up to 44.4 in February from 20 in the previous month.

However, the Lagging Index remained unchanged at 50.

BOJ cautioned on interest rate hikes

The Organization of Economic Cooperation and Development said today in its report although local demand in Japan remains sluggish, economic expansion is being spurred by business investment and exports. Economy is expected to grow between 1.5% and 2% in 2009.

OECD noted in the report, “Given remaining deflationary pressures, slower economic growth in 2007 and increased uncertainty about the outlook for growth, the central bank should not raise the short-term policy rate further until inflation is firmly positive and the risk of renewed deflation becomes negligible.”

To stabilize the government debt to GDP ratio, the OECD that budget deficit has to be lowered to between 4% and 5% of GDP.

OECD said that Japan needs to reverse the deceleration in productivity growth in the service sector to raise Japan’s growth potential through eliminating entry barriers, accelerate regulatory reform, upgrading competition policy and reducing barriers to trade and inflows of FDI.

REITs raise 500 billion yen in 2007

The Nikkei news reported today that real estate trusts raised 500 billion yen through equity financing, 36% decline in fiscal 2007 from a year ago.

Gainers & Losers

Nippon Mining House led advancers in the Nikkei 225 index shares with a rise of 8.89% followed by increases in Mitsui & Co of 8.47%, in Sumco Corp of 7.56%, in Hitachi Ltd. of 6.76%, and Softbank Corp. of 6.28%.

Nippon Mining House and other stocks advanced after metal prices increased. Copper for delivery in three months on rose to 0.6% to $8,720 a metric ton.

Other commodity stocks gained as well. Sumitomo Metal Mining climbed 5.77% and Mitsubishi Corp. gained 4.31%.

Crude oil for May delivery also rose as much as 0.6% to $106.91 last week extending a 2.3% jump on April 4. Inpex Holdings edged up 3.54% as a result.