Japan's battery shares jump on electric car hopes

TOKYO, June 4 (Reuters) - Shares of Japanese car battery makers shot up this week as investors expected growing concerns over global warming and persistently high oil prices to boost demand for electric cars.

Japan's largest car battery maker GS Yuasa Corp (6674.T: Quote, Profile, Research, Stock Buzz) rose 6.9 percent on Wednesday, adding to a 16 percent gain in the previous two sessions. Furukawa Battery (6937.T: Quote, Profile, Research, Stock Buzz) soared more than 40 percent this week.

The rally started on Monday on news that Japan's postal services system is looking to switch its entire fleet of about 21,000 short-distance delivery vehicles to zero-emission electric cars starting this business year. [ID:nT252637]

GS Yuasa has set up a joint venture with Mitsubishi Corp (8058.T: Quote, Profile, Research, Stock Buzz) and Mitsubishi Motors Corp (7211.T: Quote, Profile, Research, Stock Buzz) to produce lithium-ion batteries, a type of batteries used for electric cars. The joint venture plans to start selling them in the year starting April 2009.

"We plan to sell (the batteries) to other carmakers, and automakers both in Japan and overseas have shown interest in them," said Masanori Kitamura, GS Yuasa spokesman.

Market participants said battery makers have joined the growing list of environment-related stocks, an increasingly popular category that includes makers of non-fossile burning power plants such as nuclear reactors. "Battery (shares) are quite strong, basically because hybrids and electric cars are going to be big from now," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"Oil prices may fall, but they'll still stay at a pretty high level, and people are feeling the need to reduce carbon."

Oil has retreated from record highs, but stayed far above $100 a barrel.

But some battery makers were puzzled by the steep rise in their share price, saying there were no fundamental factors to back up the move.