Nikkei rises 1.32% on hopes for BOJ monetary easing, steady dollar

08:53, August 20, 2010      

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Tokyo stocks added to gains Thursday, with the key Nikkei stock index gaining 1.32 percent as expectations grew that Japan's central bank will take new monetary easing measures to weaken the yen's rise and a steady U.S. dollar prompted investors to buy on the dip.

Market players said that investors are eagerly awaiting the outcome of a meeting slated for next Monday between Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa and speculation is rife that further monetary easing measures may be taken by the central bank.

"There's certainly expectations in the stock market for the Kan- Shirakawa meeting, which of course raises the danger that if nothing comes out in the way of policy stocks could fall, especially if the yen strengthens," said one Tokyo-based strategist.

The Sankei newspaper reported on Thursday that the Bank of Japan (BOJ) may look to expand the size of its fund supply to 30 trillion yen (352 billion U.S. dollars) from the current 20 trillion yen, or extend the duration of cheap, fixed-rate loans to banks to six months from the present three months.

The BOJ's current fund-supply tool introduced in December helped push down money market rates and subsequently weaken the yen after it hit a 14-year high -- economists are predicting a similar move by the BOJ to be the most viable option.

The 225-issue Nikkei Stock Average advanced 122.14 points from Wednesday to 9,362.68, marking its highest closing level since Aug. 10, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 8.75 points, or 1.05 percent, to 843.98.

With the dollar steady at against the yen at 85.75 following last week's 15-year low hit last week, firms reliant on profits made abroad were given some respite, but brokers said shares moved in a narrow range Thursday as many investors not buying on the dip were on the fence ahead of the Kan-Shirakawa meeting.

"If the BOJ announces only what the report is saying, it is likely to disappoint the market. And there is a possibility that the yen may even appreciate further," said Yuji Saito, director at Credit Agricole's foreign exchange department.

Exporters were predominantly on the rise Thursday with Nissan Motor Co. Ltd. jumped 3.1 percent to 675 yen and Toyota Motor Corp. added 1.8 percent to 3,085 yen.

Mazda Motor Corp. gained 3.6 percent to 201 yen in spite of recent recall woes connected to faulty power steering issues.

Canon Inc. close up 2.8 percent to 3,680 yen and game console and software maker Nintendo Co. Ltd. climbed 2 percent to 23,810 yen.

Chip shares found favor with Tokyo Electron Ltd. surging 5.3 percent to 4,370 yen after U.S. counterpart Applied Materials Inc. forecast quarterly results that beat Wall Street estimates, as well as posting better-than-expected results for the quarter ended Aug. 1.

Elpida Memory Inc. climbed 3.9 percent to 1,127 yen and chip- tester maker Advantest Corp. rose 3.8 percent to 1,779 yen.

Property developers were among the day's notable gainers with Mitsubishi Estate Co. Ltd. leaping 3.4 percent to 1,323 yen and Mitsui Fudosan Co. Ltd. rising 3.1 percent to 1,442 yen. Sumitomo Realty & Development Co. increased 2.2 percent to 1,692 yen.

Property shares were an attractive proposition following news that a prominent housing-loan agency will extend a low-interest- rate program by an additional year and signs of improvement in building vacancy rates and solid apartment sales, which would benefit from further policy easing, lifted sentiment towards the sector, analysts said.

Some 1.65 billion shares changed hands on the Tokyo exchange's First section, up from Wednesday's volume of around 1.58 billion, with advancing issues outnumbering declining ones by 1,065 to 430.



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