Tokyo stocks buoyed by U.S. job data, dollar's strength

08:24, April 06, 2010      

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Japan's Nikkei Stock Average rose for the third consecutive session Monday as upbeat U.S. employment data lifted the dollar versus the yen and substantiated hopes the world's largest economy is back on track.

The key benchmark Nikkei added 53.21 points, or 0.47 percent from Friday to 11,339.30, its highest close since October 1, 2008. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 6.29 points, or 0.64 percent, to 995.68.

U.S. non-farm employment rose by 162,000 jobs in March, the most in three years but slightly less than expected, official data showed on Friday.

The total non-farm payroll accounts for approximately 80 percent of the workers who produce the entire gross domestic product of the U.S. and is the single most important piece of data contained in the employment report, which is considered to offer the best overview of the U.S. economy.

Brokers noted that the optimistic data had a positive impact on the dollar, which strengthened to as much as 94.79 against the yen Monday, as well as on investors' hopes the U.S. economy is in a sustained state of recovery and that corporate earnings season will be further proof of this -- earnings season swings into full gear in Japan next month.

"When employment starts to pick up, people can feel more confident in sustained economic recovery," said Naoteru Teraoka, general manager at the investment management division of Chuo Mitsui Asset Management Co.

"The yen may not continue to weaken, but the fear of a strengthening currency is at least gone and that creates expectations for exporters' earnings."

Other analysts said that the market may have become a little overstretched following its run of 18-month closing highs and selling for quick profits capped gains on Monday, although the consensus amongst market players is that there is no immediate risk of the market overheating providing it rises along with gains in the five-day moving average. The Nikkei, for the best part, has moved above its five-day moving average since early March and is unlikely to face resistance before reaching the 11,600 level.

Japanese Exporters rose on a robust U.S. dollar with Canon Inc. climbing 2.5 percent to 4,510 yen and NEC Corp. adding 1.05 percent to 290 yen. Pioneer Corp., the world's largest maker of plasma screens, leapt 4.25 percent to 368 yen and Sanyo Electric Co. Ltd. rose 2 percent to 153 yen.

Sharp Corp. jumped 3.3 percent to 1,249 yen following news the firm plans to start making advanced 3D displays this year that require no special glasses for cellphones and other mobile devices.

The Nikkei business daily newspaper also reported on Monday that Sharp plans to diversify into the electronic signboard business by offering 52 and 60-inch LCD panels that can be assembled into large displays at low cost.

Kobe Steel Ltd. soared 6.3 percent to 218 yen after Morgan Stanley raised its rating to "overweight" from "equal-weight."

Shin-Etsu Chemical Co. Ltd. advanced 3.8 percent to 5,700 yen on Monday, marking its highest close since September 2009. The chemical products maker said it will spend 100 billion yen (1.06 billion U.S. dollars) to build a plant to produce vinyl chloride resin in the U.S., the Nikkei business daily newspaper reported.

The market's upward momentum was impaired by high volumes of shares being sold for quick profits led by Fast Retailing Co. Ltd., the second most heavily traded issue in value terms, plunging 10.6 percent to 14,920 yen, after the Uniqlo casual clothing chain operator said Friday that sales at its Uniqlo shops in March dropped 16.4 percent from a year earlier, partly because of unusually cold weather in the second half of March, which hit sales of spring clothing. Fast Retailing was the biggest drag on Monday's Nikkei.

The second biggest drag on the market was Softbank Corp. whose shares fell 3.9 percent to 2,247 yen on news that Japan's government plans to make it easier for mobile phone users to switch operators while keeping the same phone, which poses concerns for the iPhone provider as other telecommunication rivals have more expansive coverage networks.

Some 1.8 billion shares changed hands on the Tokyo exchange's first section, down from Friday's volume of 2.1 billion shares.

Advancing shares outnumbered declining ones by 1,109 to 414.

Source: Xinhua


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