Nikkei rises to fresh 7-month high on tax cut plan, China data (2)

18:23, December 14, 2010      

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Japan's most powerful business lobby, Nippon Keidanren, having urged the government to cut corporate tax for some time welcomed the announcement, saying that current tax levies are too high in comparison to other countries.

"We would like to sincerely salute his political decision," said Hiromasa Yonekura, chairman of the lobby, also known as the Japan Federation of Economic Organisations. "A first step has been taken toward achieving growth strategies."

"A tax cut would be positive for Japanese companies and expectations for corporate earnings will increase. This should support the market," said Kenichi Hirano, general manager and strategist at Tachibana Securities Co.

Financial issues rose on the news, propelled by Deutsche Bank maintaining its rating on Japan's banking sector at "overweight," saying "banks excluding Resona Holdings Inc. are unlikely to recapitalize for at least the next year or two."

Mitsubishi UFJ advanced 0.5 percent to 433 yen and Sumitomo Mitsui Financial Group Inc. rose 0.6 percent to 2,805 yen. Mizuho Financial Group Inc. added 0.7 percent to 144 yen.

Japan's securities sector responded positively to possible tax relief with Nomura Holdings gaining 1.5 percent to 527 yen and Mizuho Securities leaping 4 percent to 228 yen. Daiwa Securities Group Inc. rose 2.9 percent to 427 yen.

"Foreign securities houses, which place blocks of orders ahead of the Tokyo opening, have been increasingly bullish for 12 straight days with most 'buy' orders placed on Tuesday, adding to the overall positive mood," said Kazuhiro Takahashi, general manager at Daiwa Capital Markets.

China-linked shares were also among notable gainers Tuesday, with Komatsu gaining 1.2 percent to 2,491 yen and Kubota rising 0. 5 percent to 817 yen. Inpex climbed 2.6 percent to close at 480, 000 yen.

Japanese exporters closed mixed following the yen's advance against the U.S. dollar and a muted performance in the Nasdaq Composite Index. As such, Sony fell 0.6 percent to 2,988 yen and Canon relinquished 0.5 percent to 4,080 yen.

But Olympus Corp. increased 3.6 percent to 2,556 yen, following the company's stock rating being raised to "buy" from "hold" by Deutsche Bank AG.

Japanese automakers also advanced Tuesday, led by Mitsubishi Motors Corp. who surged 8.5 percent to 128 yen, the steepest gain since December 2009. Nissan Motor Co. also closed in positive territory, adding 0.3 percent to 809 yen.

Both automakers agreed to begin jointly developing mini vehicles with the possibility of setting up a venture, according to the Nikkei newspaper.

Trading volume on Tuesday climbed to 2.38 billion shares on the Tokyo Exchange's First Section, up from Monday's volume of 2.05 billion shares, with advancing issues outnumbering declining ones by 1,150 to 354.

Source: Xinhua
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