Japan’s Topix Soars Toward Biggest Gain Since 2008

Stocks soared in Tokyo, with the Topix posting its biggest gain in more than seven years, as investors judged shares had been oversold and a report showing Japan’s economy shrank more than expected last quarter boosted the outlook for central bank stimulus.

The Topix surged 8 percent to 1,292.23 at the close in Tokyo, its best gain since October 2008, after plunging 13 percent last week. The Nikkei 225 Stock Average jumped 7.2 percent to 16,022.58 as the yen weakened for a second day.

 U.S. markets rebounded on Friday to halt the longest losing streak since September. Chinese mainland markets reopen Monday after a week long holiday during which global stocks fell into a bear market.

The Topix’s 14-day relative strength index fell to 26.49 on Friday, below the level of 30 which some traders say indicates that shares will rise.

A report Monday showed Japan’s economy shrank 1.4 percent in the fourth quarter on an annualized basis, more than economists’ forecast for a 0.8 percent contraction.

All of the 33 Topix industry groups rose, led by insurers, tire makers and brokerages. Megabank Mitsubishi UFJ Financial Group Inc., which had fallen 41 percent this year through Friday, jumped 8.7 percent.

Toyota Motor Corp., the world’s biggest carmaker, added 9.6 percent as the yen weakened against the dollar. Online retailer Rakuten Inc. tumbled 1.3 percent after reporting full-year profit slumped 37 percent.