5:00AM New York, 7:00 PM Tokyo - Japan retail sales rises 1.1% in March.

Stocks in Japan gained on the speculation that credit market related losses are not likely to rise after UBS upgraded its opinion on U.S. banks.

Market sentiment

In Tokyo trading Nikkei 225 rose 0.22% or 30.9 at 13,894.34, and the broader Topix Index increased 1.6% or 21.84 to 1,316.75.

In the first section of the Tokyo Stock Exchange 9 billion shares worth 1.2 trillion yen were traded and in the second section 325 million shares valued at 6.6 billion yen changed hands.

Of the Nikkei 225 stocks 126 gained, 93 declined and 6 were unchanged. Mitsubishi UFJ Financial Group led advancers in the index shares with a rise of 18.36% on investor speculation that the worst is over in the financial markets.

Markets will be closed tomorrow for a holiday.

Japan retail sales increase in March

Japan’s Ministry of Economy Trade and Industry reported today that retail sales rose 1.1% in March from a year earlier. Economists expected sales to jump by 1% in the review period.

Sales also advanced 0.5% from a month earlier.

Fuel sales increased 4%, while food and beverages and clothing jumped 0.6% and 0.3% respectively.

Panasonic and Sanyo may collaborate

Then Yomiuri newspaper reported today that Matsushita Electric Industrial Co. and Sanyo Electric may collaborate as major shareholders of Sanyo Electric, including Sumitomo Mitsui Banking Corp and Daiwa Securities SMBC.

According to the paper, Matsushita might buy the 300 billion yen worth of preferred shares that were issued to Goldman Sachs, Sumitomo and Daiwa in 2006 at a marked discount, with the possibility of combining the two businesses in the future.

Analysts believe that the merger of the two companies will create Japan’s biggest electronics maker with sales worth 11 trillion yen.

Gainers & Losers

Mitsubishi UFJ Financial Group led advancers in the Nikkei 225 index shares with a rise of 18.36% followed by rises in Shinsei Bank Ltd. of 13.53%, in Mizuho Financial Group of 9.52%, in Sumitomo Mitsui Financial Group of 9.14%, and T&D Holdings of 9.08%.

Financial stocks gained after UBS AG upgraded U.S. banks, citing “reduced systemic risks”, a development that stocked expectations that the subprime mortgage-related losses are on the wane.

Retailers also advanced after a government report showed that retail sales jumped 1.1% in March. Aeon Co Ltd increased 7.92% and J Front Retailing gained 5.67% on the news.

Exporters increased after the yen weakened from 104.55 to 104.57 against the dollar. Sony increased 1.46% and Mazda rose 7.89% on the news.