Nikkei rise 0.75% on optimistic sentiment

20:21, December 27, 2010      

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In the thin holiday trade Tokyo stocks rose Monday, with the key Nikkei stock index adding 0.75 percent as confidence in global economic growth underpinned investor's optimistic sentiment and offset concern about China's second interest rate hike in as many months.

China's Shanghai Composite Index, largely regarded as the benchmark for all the nation's bourses, climbed as much as 1.5 percent in early trading on speculation a second interest-rate increase since mid-October will reduce inflation, however, following the close of trading in Tokyo Chinese shares retreated.

"Market players knew that the rate hike was coming and the overall consensus is that China will continue with money tightening into the next year, so the negative reaction is limited, " said Mitsushige Akino, general manager at Ichiyoshi Investment Management.

Other analysts noted that with other major bourses in Hong Kong and Australia both closed for national holidays, the full reaction to the rate hike remains unclear and as such, coupled with the year coming to a close, investors were reluctant to take up firm positions and push the market higher. And since market players had already largely factored in the move all eyes are on China's wider development.

"For the Japanese stock market, how Chinese stocks perform is important, but more so is what Chinese economic conditions will be, " said Masatoshi Sato, senior strategist at Mizuho Investors Securities Co. "We had the rate hike, but it's not as if the Chinese economy will slow, just because of it."

The 225-issue Nikkei Stock Average gained 76.80 points from Friday to close at 10,355.99, whilst the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 3.02 points, or 0.33 percent, to 904.68.

China-linked issues faired well Monday, with construction machinery maker Komatsu adding 0.7 percent to 2,486 yen and industrial farm equipment manufacturer Kubota rose 0.8 percent to 778 yen. Meanwhile, industrial robotics maker Fanuc climbed 1.5 percent to 12,500 yen.

Among exporters and high-tech issues, Elpida Memory jumped 1.6 percent to 942 yen, after Kyodo News reported the company is in talks with China's Taiwan semiconductor companies including Powerchip Technology Corp. for mergers and tie-ups.

Another notable gainer was Hitachi who climbed 0.7 percent and Canon rose 0.9 percent after the Nikkei newspaper said Hon Hai Precision Industry Co. of Taiwan plans to acquire control of a liquid-crystal display venture between Hitachi and Canon for 100 billion yen.

Olympus advanced 1.1 percent to 2,521 yen and Nikon gained 0.7 percent to 1,668 yen. Canon closed up 0.9 percent to 4,310 yen after the company raised the projection for its full-year dividend payment on Friday.

Financials held firm, with Sumitomo Mitsui Financial Group, the day's most traded stock in value terms, rising 0.4 percent to 2, 899 yen and volume leader Mizuho Financial Group advancing 0.7 percent to 153 yen.

It was a particularly bright day for Dai Nippon Printing Co., provider of printing services, who leapt 1.8 percent to 1,122 yen, following the company announcing it will triple production of film used for lithium-ion batteries and solar cells, the Nikkei newspaper reported.

Trading volume on Monday fell to 1.25 billion shares on the Tokyo Exchange's First Section, down from Friday's volume of 1.28 billion shares, with advancing issues outnumbering declining ones by 808 to 672.

Source: Xinhua
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