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. The trade surplus rose 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 grow to 837.5 billion yen, according to the median forecast of 12 economists surveyed by Bloomberg News. The 2.1 percent gain in exports in February, the first rise in three months, may help Prime Minister Junichiro Koizumi fend off a fourth recession since 1990 and lift stocks from levels that threatened to drive some banks and insurers out of business. Exporters are counting on a rapid end to a war that may imperil global demand. ``We pray that the war will end quickly,'' said Yasuhiro Fukagawa, spokesman for Matsushita Electric Industrial Co., saying that a prolonged conflict would drive up costs of shipping the company's computers and mobile phones.
The Nikkei 225 Stock Average had its biggest gain in four months, rising 2.9 percent to 8435.07 at the 3 p.m. close of trading in Tokyo. Exporters such as Canon Inc. and TDK Corp. led the gains. The Bank of Japan said it would hold an extra board meeting tomorrow to ``examine the current severe financial and economic conditions, including the effect of the U.S. military attack on Iraq, and consider necessary monetary adjustment.'' The central bank's new governor, Toshihiko Fukui, is under pressure from politicians to pump more money into the economy to halt almost five years of falling consumer prices and to prop up the stock market. The bank is running out of conventional policy tools after cutting rates almost to zero in March 2001.
Stock Buying
The Nikkei's 25 percent decline in the past year will hurt banks and insurance companies, which must account for investment losses when they close their books for the business year ending March 31. Leaders of Japan's ruling coalition parties have asked the central bank to expand purchases of stock from banks to limit their losses from declining share prices. The central bank now plans to buy 2 trillion yen of stock through September. 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 Corp.'s flat-screen television sets and Honda Motor Co. cars. Exports accounted for half of Japan's 0.5 percent economic expansion last quarter.
Growth Driver
``Exports are still driving growth, but they are facing more negative risks'' because of the war, said Taro Saito, an economist at NLI Research Institute. 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 120.81 to the dollar at 4:54 p.m. in Tokyo from 121.50 late Friday in New York. Exports to U.S. 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