Nikkei rises 0.10% on U.S. housing, consumer data; market eyes jobs report

18:26, December 03, 2010      

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Tokyo stocks closed higher Friday, with the key Nikkei stock index rising 0.10 percent as further economic data from the U.S. boosted investor sentiment and confidence that the global economic recovery was back on track, although there was some caution as the market waited for the highly anticipated jobs report due out from the U.S. later on Friday.

Brokers said that easing fears about Europe's debt crisis also leant support to the market and investors took heart in the news that the European Central Bank plans to buy Portuguese and Irish debt.

"The (European Central) bank's actions seemed to assure investors about the soundness of the governmental bonds as interest rates on Irish, Portuguese and Spanish bonds all dipped in late-day trading," said one local fund manager.

"The central bank said it will continue to make cheap, emergency loans available to commercial banks in Europe, at least through the end of March, and to maintain its one percent benchmark lending rate for the 20th straight month and this is offsetting previous fears about contagion in the region," he said.

Strategists also noted that stronger-than-expected November same-store sales from U.S. retailers, coupled with a sharp rise in pending home sales and a better labor market, spurred market players to chase higher issues Friday with the Nikkei hitting a brief six-month intraday day.

According to the National Association of Realtors, pending sales of U.S. existing houses jumped by a record 10 percent in October. U.S. Chain store sales in November leapt 6 percent on growing consumer confidence, far higher than analysts predictions for a 3.6 percent increase, with strategists citing earlier-than- ever holiday promotions, improving economic conditions and pent-up demand by consumers as contributing to the surge. Capping off the positive data from the U.S., reports showed claims for jobless benefits over the past month on average dropped to a two-year low.

"Risks that the economy will deteriorate are decreasing and market sentiment is improving," said Kenji Sekiguchi at Mitsubishi UFJ Asset Management Co. "The U.S. economy is starting to come out of a period of marking time, during which the momentum of the economic recovery slowed."

Other analysts pointed out that predictions are for the world's biggest economy to continue its momentum in the foreseeable future, further easing previous fears about a potential double-dip.
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