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By Bloomberg

Japanese stocks rose, with the Topix index closing higher for a third day, as the yen fell to a seven-year low against the dollar after minutes of the Federal Reserve highlighted a divergence in global monetary policy.

Toray Industries Inc. jumped 6.4 percent, leading gains in the textile and fiber sector, after Iwai Cosmo Securities Co. raised its outlook on the stock. Toyota Motor Corp., which gets about 30 percent of its sales from North America, added 1 percent. Credit Saison Co. dropped 3.3 percent, as consumer lenders fell the most among the 33 Topix industry groups.

The Topix added 0.1 percent to 1,397.64 at the close of trading in Tokyo. The measure pared gains of as much as 0.6 percent in the morning session. The Nikkei 225 Stock Average climbed 0.1 percent to 17,300.86. The yen dropped 0.6 percent to 118.64 per dollar, its weakest level since August 2007.

“While the focus is on when the U.S. will raise rates, Japan continues to ease,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. A confirmation of the difference in policy direction has “pushed the yen to 118 to the dollar, and large cap stocks are likely to rise today on this.”

The Topix rose the past two days as Prime Minister Shinzo Abe postponed a planned sales-tax increase, called a snap election and ordered his ministers to start preparing a stimulus package after a report this week showed the economy had fallen back into recession. A report today showed exports rose 9.6 percent in October from a year earlier, the most in eight months.

BOJ Stimulus

The BOJ yesterday concluded a two-day policy meeting and kept a pledge to expand the monetary base at an annual pace of 80 trillion yen, as forecast by all 31 economists in a Bloomberg News survey.

“Japanese shares had been rising after the Bank of Japan expanded monetary easing, but now investors are starting to take profits,” said Seiichiro Iwamoto, who helps oversee the equivalent of $37 billion at Mizuho Asset Management Co. in Tokyo. “However, with the yen weakening, investors are looking for shares that benefit from a weaker currency.”

In the U.S., policy makers weighed their commitment to holding key rates near zero for a “considerable time,” according to minutes of the Fed’s October review released yesterday.

The Standard & Poor’s 500 Index fell 0.2 percent yesterday from an all-time high as the Fed minutes showed some members said the central bank should remain attentive to the possibility prices in the economy aren’t rising fast enough. Futures on the S&P 500 slipped 0.2 percent today.

Topix Doubles

The Topix has almost doubled since November 2012, with investors in Japanese stocks about $1 trillion richer, as policies of Abe and the Bank of Japan weakened the yen and spurred inflation. The measure is up 19 percent from an Oct. 17 low after the central bank added to quantitative easing, the $1.1 trillion pension fund pledged to buy more shares and amid speculation Abe wouldn’t go through with the tax increase.

Abe will delay raising the consumption levy originally planned for next October by 18 months. Parliament will be dissolved Nov. 21. The vote will be held on Dec. 14, Finance Minister Taro Aso posted in a statement on his website.

Japanese stocks tend to rise after elections are called. In 11 elections since 1980, the Topix index has posted average total return of 3.1 percent between the dissolution of parliament and the vote, according to data compiled by Bloomberg and Daiwa Securities Group Inc.

Textile Gains

Toray gained 6.4 percent to 930 yen, its highest close since August 2007 and leading gains on the Topix Textiles & Apparels Index, which rose 3.2 percent. Iwai Cosmo Securities raised its outlook on the stock to outperform from neutral plus.

Toyota gained 1 percent to 7,098 yen. Honda Motor Co., which gets about 80 percent of its sales from outside Japan, rose 1.5 percent to 3,676.5 yen. Canon Inc., which gets more than 80 percent of its revenue internationally, added 1.1 percent to 3,676 yen.

The Topix Other Financing Business Index of consumer lenders lost 2.1 percent, the most among the broader gauge’s industry groups. Credit Saison led declines, sinking 3.3 percent to 2,281 yen. Orix Corp. dropped 2.7 percent to 1,537.5 yen. Aiful Corp. slumped 2 percent to 453 yen.

The Topix traded at 1.3 times book value today compared with 2.8 for the S&P 500 yesterday, according to data compiled by Bloomberg.