Sumitomo Metal Industries led risers with a gain of 4.68% on reports that the company and its competitors will increase their shareholding in each other.

Japan’s Ministry of Finance reported today that exports rose 9.7% in November below the 10.5% forecasted by economists. Imports also rose 13.2% in November compared to 8.6% in October, prompting surplus to decline 12.2% to 797.4 billion yen.

Shipments to the U.S. fell for the third month to 6% compared to 1.5% in October, while exports to China grew at the slowest pace since February to 13.7%. Similarly, shipments to the EU rose the slowest since April 2006 to record a 8.2% gain.

Separately, the Ministry of Finance said that Japan’s expenditure will increase 0.2% to 83.1 trillion yen in them fiscal year starting in April. About 25.3 trillion yen of new debt would be sold to fund the widening deficit.

However the proposed general account budget is 0.2% bigger than the fiscal 2007 budget due to increases in social security tax and local tax grants.

Japan plans to cut public works spending by 3.1% to 6.7 trillion yen, defense by 0.5% to 4.8 trillion yen and foreign aid by 4% to 700.2 billion yen. But social security costs would increase by 3% to 27.8 trillion yen.

It is estimated that debt at central and local governments would reach 776 trillion yen by March 2009, which translates to 147.2% of GDP. Furthermore tax gains and subsidies to local government would also increase by 4.6% next year.

According to the finance ministry, tax revenue is projected to slow by 0.2% to 53.6 trillion yen next year compared to the gain of 16.5% realised in the current fiscal year.

A supplementary 895.4 billion yen is proposed for the current fiscal year. The budget would be approved by Cabinet on December 24th and submitted to parliament in January.

The Bank of Japan today unanimously elected to keep the key interest rate at 0.5% as the Atsushi Mizuno, the lone dissenter in the previous meetings, also joined in to support to hold the rate as business conditions continue to deteriorate.

Of the Nikkei 225 index shares Sumitomo Metal Industries led gainers with a rise of 4.68% followed by gains in Sumitomo Mitsui Financial of 3.62%, in Mitsui Sumitomo of 3.47%, in Millea Holdings of 3.39%, and in Fast Retailing of 3.33%.

Sumitomo Metal Industries gained on the Nikkei news reports that the company, Nippon Steel Corp, and Kobe Steel Ltd, each will spend 260 billion yen to double the current cross shareholding.

Financial stocks also gained after the Nikkei online edition reported that the country’s three biggest lenders are likely to reject a request by the U.S. banks to contribute about $15 billion yen towards the subprime asset bail out fund.

Mitsubishi UFJ Financial Group climbed 2.23%, Mizuho Financial Group spiked 1.89% and Resona Holdings increased 2.60%.

Nippon Kayaku led the decliners in the Nikkei 225 stocks with a fall of 10.86% followed by losses of 5.79% in Clarion Company Limited, in Sumco Corporation of 5.1%, in Taiheiyo Cement of 3.8%, and in Konica Minolta Holdings 3.73%.

Hino Motors announced today that the company aims to increase sales of tucks and buses to 118,200 in the next fiscal year and increase overseas sales to 71,700 units. Sales in Japan are however projected to decline 2.3% to 46,500 units. Global production is estimated to increase 10% to 117,500 vehicles next year.

Bloomberg news reported today that Japan’s Real Estate Investment Trusts face acquisitions or privatization as 75% of the listed REITs are trading below their net asset value. The REIT Index is headed for its first decline since 2004.

5:00AM New York, 9:00PM Sydney - The Australia index declined by 0.6% after loses in mining and financial stocks.

ASX 200 index declined 0.6% or 39.5 to close at 6,176.90.

BHP Billiton closed down 1.4%, Rio Tinto declined 1.8%, and Commonwealth Bank of Australia declined 1.2%.