5:00AM New York, 7:00PM Tokyo - Japan’s fourth quarter economic growth increases to 0.9% from 0.8% in the third quarter.

Stocks in Japan rebounded after the economic growth in the fourth quarter exceeded expectations and better than expected January retail sales in the U.S. Earnings from Nippon Sheet Glass also helped market sentiment.

Market Sentiment

In Tokyo trading Nikkei 225 rose 4.27% or 558.15 to 13,626.45, and the broader Topix Index increased 3.7% or 47.09 to 1,332.44.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1.05 trillion yen were traded and in the second section 278 million shares valued at 314 billion yen changed hands.

Of the Nikkei 225 stocks 222 gained and 1 declined. Sumco Corp. led gainers with a rise of 13.98% followed by Taiheiyo Cement increasing 12.92%.

Fourth Quarter GDP Rises

The Cabinet Office reported today in the preliminary figures for fourth quarter GDP growth that the country’s gross domestic product increased to 0.9% from 0.8% in the third quarter.

In real terms, the domestic market contributed 0.5%, while exports contributed 0.4% and in nominal terms the domestic market contributed 0.2% and net exports added 0.5%.

According to the Cabinet Office, private consumption rose to 0.2% from 0.1% in the previous quarter in real terms and advanced 0.4% from zero growth in nominal terms in the third quarter. Household consumption also rose by the same figures both in real and nominal terms.

Fourth quarter private residential investment declined in real terms to 9% from 8.3% decline in the earlier quarter. Similarly, in nominal terms investment in the sector fell to 9.3% from a decline of 8.2%.

Conversely, non-residential real investment rose to 2.9% in the fourth quarter from 1.1% in the third quarter, while it jumped in nominal terms to 2.7% from 1.3% from the previous quarter.

Public demand also rose as well in the three months to December from 0.1% to 0.8% in real terms and gained 0.3% from 0.2% in nominal terms.

Furthermore, declines in public investment slowed to a loss of 0.7% from a fall of 1.9% in the quarter earlier period in real terms. In nominal terms, it also narrowed to a loss of 0.4% from a loss of 1.6%.

Exports in the fourth quarter were unchanged at 2.9% in real terms, but fell marginally to 1.7% from 2% a quarter ago in nominal terms.

Imports increased to 0.5% in real terms from a decline of 0.1% in the previous quarter and gained 3.5% from 0.1% in the previous quarter in nominal terms.

U.S. Retail Sales Unexpectedly Rise

The U.S. Commerce Department reported yesterday that retail sales rose 0.3% in January. Economists were expecting a fractional decline. Higher sales of gasoline, apparel, and automobiles lifted retail sales. Economists are still expecting retail sales to decline in 2008 as consumers battle rising food and energy prices, stagnant wages, falling home values, and tight credit markets.

Construction Machinery Set to Increase

Japan’s Construction Equipment Manufacturers Association shipments of excavators, tractors, cranes and other construction machinery may rise to 2.6 trillion yen in the fiscal year beginning in April. In the fiscal 2007, the industry recorded a sale of 2.35 billion yen and exported 66% of its production.