Tokyo, March 24 (Bloomberg) -- Japan's trade surplus rose by more than a fifth in February as exports gained, helping the world's second-largest economy sustain a recovery from recession as the war in Iraq threatens to disrupt global demand. The trade surplus widened to 847.09 billion yen ($7 billion), seasonally adjusted, from a revised 690 billion yen in January, Ministry of Finance figures showed. The surplus had been expected to widen to 837.5 billion yen, according to the median forecast of 12 economists surveyed by Bloomberg News. Overseas sales by companies such as Sharp Corp. accounted for half of Japan's 0.5 percent economic expansion last quarter. February's 2.1 percent gain in exports, the first rise in three months, may help Prime Minister Junichiro Koizumi fend off a fourth recession since 1990 and lift share prices as companies prepare to close their books for the fiscal year ending March 31. ``Exports are still driving growth, but they are facing more negative risks'' because the war in Iraq may dent demand for Japanese goods, said Taro Saito, an economist at NLI Research Institute.
The Nikkei 225 Stock Average had its biggest gain in four months, rising 2.7 percent to 8415.73 at 2:12 p.m. in Tokyo. Exporters such as Canon Inc. and TDK Corp. led the gains. The second straight monthly drop in imports added to the widening surplus as Japan bought fewer goods from China and other Asian countries that celebrated the Lunar New Year during the first week of February. A prolonged war in Iraq might shrink the surplus by disrupting trade and hurting world demand for products such as Sharp's flat-screen television sets and Honda Motor Co. cars.
Oil Prices
A long war could also force Japan to pay more for its oil imports, which account for almost all of its consumption. Crude oil rose as much as 2.9 percent today after U.S. Marines engaged in the fiercest fighting of the war, raising concern that protracted hostilities may disrupt supplies from the Middle East. Japan's crude oil imports rose 62 percent in February from a year earlier, the biggest gain in almost two years, as prices rose. The government doesn't provide industry breakdowns for the seasonally adjusted monthly trade figures. The yen strengthened to 120.89 to the dollar at 2:13 p.m. in Tokyo from 121.50 late Friday in New York. Exports to the U.S., Japan's biggest overseas market, fell 13.6 percent from a year earlier. That was the biggest drop in 15 months and the second straight month of declines. ``The war in Iraq clouds the outlook'' for trade, said Toshiyuki Hara, a senior market economist at Mizuho Securities Co. ``With exports to the U.S. falling, that will crimp exports to Asia, because a lot of the goods eventually end up in the U.S.'' From a year earlier, the trade surplus rose 20.4 percent to 936.2 billion yen in February. Exports rose 7.6 percent and imports gained 4.5 percent. //www.quote.bloomberg.com