Tokyo stocks climb as eurozone fears recede

19:44, June 11, 2010      

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Japan's Nikkei climbed sharply Friday as gains on Wall Street lifted investor sentiment and signs that Europe's debt crisis may be receding encouraged buying as the yen retreated against the euro.

The 225-issue Nikkei Stock Average rose 162.60 points, or 1.7 percent to close the week at 9705.25, whilst the broader Topix index of all the Tokyo Stock Exchange First Section issues gained 9.65 points, or 1.1 percent to 866.44.

Brokers said a number of positive factors emanating from the eurozone buoyed investor sentiment Friday, such as the central bank forecasting an economic expansion of nearly 1 percent in the region, up from previous estimates of 0.8 percent.

The European Central Bank (ECB) raised its forecast in the eurozone for this year and cut it for 2011, saying it predicts the economy will expand around 1 percent in 2010 compared with a previous forecast of about 0.8 percent, according to a statement by Jean-Claude Trichet, head of the ECB.

He added, however, that Europe's economy will continue to grow about 1.2 percent in 2011, lower than an earlier projection of around 1.5 percent because of weaker domestic demand.

"The ECB reminded investors that the real global economy is on a recovery trend," said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., who added that, "Investors had been focused on Greek issues."

"Sentiment was bright from the start as U.S. stocks performed well overnight," said another Tokyo-based analyst. "The sharp rise in trading volume shows the potential for investors' risk appetite to return and for more stocks to be bought -- provided the cues coming for Europe are positive."

The yen dropped to 111.28 against the euro on Friday, down from 110.03 at the close of stock trading in Tokyo on Friday. The Japanese currency also depreciated to as low as against 91.75 to the U.S. dollar.

Investors cheer a weaker yen against other major currencies as it boosts the value of export-related shares when yields are repatriated into the domestic currency.

Subsequently, Canon Inc. advanced 1.9 percent to 3,715 yen and Panasonic Corp. surged 6.9 percent to 1,220 yen, helped by news its Sanyo Electric subsidiary will consider producing photovoltaic modules locally in the U.S. and in Europe.

Sanyo Electric climbed 4.8 percent to 130 yen and Sony Corp. rose 1.9 percent to 2,571 yen.

Sharp Corp. climbed 3.9 percent to 967 yen, following Morgan Stanley MUFG hiking its rating on the firm to "overweight" and raised its target price on the stock based on growth expectations for its LCD business.

The resignation Friday of financial services minister Shizuka Kamei from the newly formed Naoto Kan cabinet helped bolster financial shares as, according to analysts, Kamei had been a proponent of stricter financial regulations including the revised money lending law scheduled to take effect next week.

Kamei, leader of the People's New Party, quit Kan's cabinet to protest the Democratic Party of Japan's (DPJ) decision to postpone the passage of a controversial postal service reform bill.

"It was a bit unusual for somebody from such a tiny political party to have this much importance, and with him gone the Kan administration is likely to strengthen its foundation going into the election," said Yamagishi at Mitsubishi UFJ Morgan Stanley Securities.

Japan's top lender Mitsubishi UFJ Financial Group Inc. gained 3. 1 percent to 429 yen, while Sumitomo Mitsui Financial Group Inc. added 1.4 percent to 2,647 yen.

Japanese glass makers were notable gainers on the last trading day of the week, due to their large exposure to European markets and the rise of the currency.

Asahi Glass Co. Ltd. rose 2.7 percent to 928 yen, while Nippon Sheet Glass added 2.6 percent to 238 yen -- 47 percent of the glass maker's sales are in Europe.

On Friday, some 2.8 billion shares changed hands on the Tokyo exchange's First section, up from Thursday's volume of 1.68 billion, marking the highest volume traded since May 2.

Advancing issues outnumbering declining ones by almost 4 to 1.

Source: Xinhua


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