Tokyo stocks rebound on robust Chinese economic data

19:35, June 10, 2010      

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Japan's Nikkei average rose Thursday as positive GDP data, robust Chinese economic data and strengthening euro lifted the market from the previous day's six month lows and provided investors with a diversion away from Europe's lingering debt woes.

The 225-issue Nikkei Stock Average gained 103.52 points, or 1. 10 percent, from Wednesday to 9,542.65, and the broader Topix index of all First Section issues on the Tokyo Stock Exchange advanced 6.42 points, or 0.75 percent, to close at 856.79.

Analysts in Tokyo said that investor sentiment was buoyed by data from China showing that exports had risen 48.5 percent in May and imports by 48.3 percent from a year earlier, providing hope that the global economic recovery was still on track and that China's booming economy was resilient to the fallout from Europe's debt crisis.

''The Chinese data did not show that the (Chinese) economy has been affected by the (debt) problems facing Europe for now,'' said Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets Co.

"The euro fell sharply (against the yen) recently but its slide has slowed, so concerns over the euro also retreated,'' Nishimura added.

Brokers said that China's continued growth was a positive sign for investors as some faith in the global economic recovery had been restored and that foreign investors, who have taken flight form risky assets like stocks recently, were selling for liquidity, not as a reflection on Japanese markets as a whole.

"The global economy doesn't appear to be in such a bad shape, except for problems with Europe's finances," said Kenichi Hirano, operating officer at Tachibana Securities."Foreign investors that have been selling Japanese stocks want to sell because they're worried about liquidity, not because they have reviewed their stance on Japan. They'll need to see European problems calm down."

Additionally government data released just before the markets opened Thursday showed that Japan's real gross domestic product ( GDP) increased an annualized 5.0 percent in the January-March period, marking the fourth straight quarter of gain, as an increased demand for Japanese exports, particularly from emerging markets, has led to an increase in corporate capital expenditure to meet with increased demand and domestically consumers are being less thrifty, the Cabinet Office report showed.

China-linked shares rose with robotics maker Fanuc Inc. soaring 6.2 percent to 10,230 yen and SMC Corp., a pneumatic equipment maker that gets about 65 percent of its sales from Japan and Asia, climbing 7.1 percent to 12,780 yen.

Komatsu Ltd. also ended trade in positive territory rising 0.5 percent to 1,610 yen.

Resource-related stocks rose as crude oil for July delivery yesterday rose 3.3 percent in New York on Wednesday and the The London Metal Exchange Index posted a rise for the second straight day.

Inpex Corp. advanced 3.9 percent to 555,000 yen, while smaller rival Japan Petroleum Exploration Co. increased 3.1 percent to 4, 125 yen.

Trading company Mitsui & Co., lost ground however, as the Gulf of Mexico oil spill could affect the company's business as its U.S. unit has a stake in the oil well, sources close to the matter reported.

"There's talk about huge amounts of money and concern about the impact it might have on earnings. Also, the oil hasn't stopped flowing yet," said Fujio Ando, senior managing director at Chibagin Asset Management.

U.S. President Barack Obama's administration is planning to impose harsh penalties on BP as public disapproval over the company's inability to contain the problem escalates. Concerns that stricter regulations regarding drilling could impact other global energy companies has started to rattle trading companies. Mitsui & Co. sank nearly 6 percent to close at 1,099 yen at the 3 p.m. bell.

On Thursday, some 1.68 billion shares changed hands on the Tokyo exchange's First section, down from Wednesday's volume of 2 billion, with advancing issues outnumbering declining ones by 967 to 542 and 163 remaining unchanged.

Source: Xinhua


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