Nikkei gains 1.22 pct. on weaker yen, upbeat economic data

08:35, March 02, 2011      

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Tokyo stocks extended gains Tuesday, with the key Nikkei stock index rising 1.22 percent as easing concerns about rising oil costs, a weaker yen and upbeat U.S. economic data saw investors snapping up shares that had previously been oversold.

The problems in Libya and fears the geopolitical unrest could spread to oil-rich nations eased Tuesday and brokers said that other external factors were now being eyed by the market.

"Anxiety about Libya increased last week, but the market has calmed for now because it doesn't seem likely to spread," said Junichi Misawa, head of equity investment at Tokyo-based STB Asset Management Co. "If you look past special factors like the situation in Libya, overall the global economy is improving."

Misawa was referring to the yen's retreat and crude oil's drop overnight which punctuated the impact of the latest U.S. and domestic economic data.

The Institute for Supply Management-Chicago Inc. reported yesterday its business index rose to 71.2 in February, the highest level since July 1988, from 68.8 in January.

A reading greater than 50 signals expansion and February's gauge exceeded economists' expectations for a negative reading and reinstalled faith in investors that the U.S. economic recovery is back on track.

Coupled with this, the data raised expectations that the ISM manufacturing figure for February, scheduled to be released later on Tuesday, would also be upbeat.

"It will be easier to shift from pessimism to optimism this week on the back of a recovery in the U.S. economy," said Masayoshi Yano, senior market analyst at Meiwa Securities.

News yesterday from the U.S. Commerce Department announcing that incomes climbed 1 percent in January, far more than leading economists expected, also helped elevate the market mood, analysts said.

The 225-issue Nikkei Stock Average added 129.94 points from Monday to close at a one-week high of 10,754.03, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 12.43 points, or 1.31 percent, to close at 963.70.

Brokers also noted that domestic macroeconomic data also helped lift the market mood as figures released by the Labor Ministry and the statistics bureau indicated the nation's harsh employment situation is showing signs of improvement.

The number of jobless people in January totaled 3.09 million, down 140,000 from a year earlier, marking the eighth straight monthly fall and the number of people who were asked to leave their jobs due to corporate failures and other business misfortunes fell by 200,000 people.

Data showed the jobs-to-applicants ratio rose to 0.61 from a revised 0.58 in December, with the number of new job offers increasing 18.8 percent from a year earlier and rising for the 11th straight month, suggesting a moderate turnaround in Japan's labor market.

An optimistic mood following upbeat domestic and U.S. economic news, combined with the yen's retreat against its major counterparts and easing concerns about Middle Eastern and Northern African uprisings, gave exporters a significant lift on Tuesday.

Bridgestone climbed 3.8 percent to 1,737 yen and Nissan Motor advanced 2.6 percent to 857 yen. Olympus rose 1.9 percent to 2,434 yen and Mitsubishi Heavy Industries leapt 4.6 percent to 363 yen, following the Nikkei newspaper reporting the firm won a 20 billion yen (243.48 million U.S. dollars) order to supply tankers to one of Japan's largest shipping lines.

"As the U.S. dollar managed to rise above the 82 yen line in Tokyo on buybacks after hovering at the critical level, it became a factor supporting the market," said Yumi Nishimura, senior analyst at Daiwa Securities Capital Markets Co.

Financial issues were also robust and among today's biggest gainers, with top-lender Mitsubishi UFJ Financial Group rising 3.3 percent to 468 yen and Sumitomo Mitsui Financial Group Inc. adding 3.2 percent to 3,185 yen.

Shinsei Bank leapt 7.7 percent to 112 yen, to become the biggest winner in today's Nikkei, after Credit Suisse raised its rating on the company to "outperform" from "neutral," and news the bank plans to raise up to 69.4 billion yen (844.87 million U.S. dollars) by issuing new shares, didn't spark dilution fears.

Japan's two-largest advertising firms were very much in the spotlight Tuesday with Dentsu jumping 4.9 percent to 2,723 yen, after announcing it will become the official representative of Facebook's sales and marketing operations in Japan.

Counterpart Hakuhodo climbed 4.6 percent to 5,420 yen following an upgrade by Morgan Stanley MUFG Securities to "equal-weight" from "underweight."

Trading volume on Tuesday dropped to 2.23 billion shares on the Tokyo Exchange's First Section, falling from Monday's volume of 2. 50 billion shares, with advancing issues surpassing declining ones by 1,244 to 300.

Source: Xinhua
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