Nikkei advances on Europe relief but capped by yen

* Nikkei up 0.8 pct, moving further away from 16-mth lows

* Resistance looms; next support seen at 8,800, 8,697

* Trend Micro jumps on report of takeover proposals

By Aiko Hayashi and Shinichi Saoshiro

TOKYO, Sept 9 (BestGrowthStock) – Japan’s Nikkei average rose 0.8
percent on Thursday, lifted by short-covering after successful
bond auctions in Portugal and Poland helped ease worries about
Europe’s debt problems.

But the strength of the yen, which stayed within sight of a
15-year high versus the dollar touched on Wednesday, weighed on
investor confidence. In addition resistance looms on technical
charts, casting doubt over further gains in the Nikkei.

“Worries about Europe were soothed somewhat following a bond
auction in Portugal, and that prompted short-covering in the
market, which was hit hard by the advance in the yen versus the
dollar and the euro yesterday,” said Tsuyoshi Segawa, an equity
strategist at Mizuho Securities.

“But market players were reminded that Europe’s sovereign
concerns are continuing and that it’s not something that will
improve right away. Even though further falls are likely to be
limited for the Nikkei, more gains are also likely to be capped
for a while.”

The benchmark Nikkei (.N225: ) rose 73.79 points to 9,098.39,
pulling away from a 16-month low of 8,796.45 hit on Sept. 1.

The broader Topix (.TOPX: ) added 0.7 percent to 826.84.

Market sentiment improved after a successful auction of
Portuguese debt eased concerns about the credit-worthiness of
weaker European economies. [ID:nLDE6871LP]

The dollar changed hands at 83.64 yen (JPY=: ) after falling as
low as 83.34 yen (JPY=: ) on Wednesday, a new 15-year trough.
[FRX/]

On the political front — which may at least have a temporary
impact on the yen — Prime Minister Naoto Kan is seeking to fend
off a challenge to his leadership of the ruling party from
veteran powerbroker Ichiro Ozawa, with a party vote set for Sept.
14.

Markets are keeping a close eye on political developments as
they could spell a potential shift in how the country copes with
the strong yen, weak economy and huge public debt.
[ID:nTOE68606H]

“Speculation about the vote and its consequences on the
markets will remain rife until the vote is over. The key point is
whether each candidate will actually stick to their proposed
policies if they win,” said Junichi Misawa, a senior fund manager
at STB Asset Management.

The Nikkei stayed below 9,170, around its 25-day moving
average, which had served as strong resistance from August until
it was pierced briefly this week. The 25-day moving average is
considered a proxy for a one-month moving average and is closely
watched in Japan.

The bottom of the Nikkei’s Ichimoku cloud lies around 9,530,
forming resistance for the index. Ichimoku charts are popular
with Japanese traders.

Market analysts see support around 8,800, and after that the
next target is 8,697, a 61.8 percent retracement of the Nikkei’s
rally from its March 2009 low to its April 2010 high.

EXPORTERS UP, TREND MICRO SOARS

Shares in Trend Micro (4704.T: ) jumped as much as 21 percent
after a Taiwanese newspaper said the anti-virus computer software
developer had received takeover proposals, citing its CEO.
[ID:nTOE688031]

It closed up 10.3 percent at 2,576 yen after the firm said it
hadn’t had any concrete proposals. [ID:nTKX006981]

Shares of exporters regained ground after leading a drop in
the market the previous day.

Canon Inc (7751.T: ) advanced 1.1 percent to 3,550 yen and
Kyocera Corp (6971.T: ) rose 1.5 percent to 7,540 yen. Automakers
also climbed, with Toyota Motor Corp (7203.T: ) up 1.9 percent at
2,930 yen.

Shares of Sumitomo Metal Mining (5713.T: ) gained 3.2 percent
to 1,194 yen after Credit Suisse raised the target price for the
stock and revised its rating to “outperform”, citing good
long-term growth prospects for the smelter amid an upturn in
nonferrous metal markets.

Some 1.3 billion shares changed hands on the Tokyo exchange’s
first section, the lowest volume in more than two weeks.

Advancing stocks outnumbered declining ones by 3 to 1.
(Additional reporting by Isabel Reynolds; Editing by Joseph
Radford)

Nikkei advances on Europe relief but capped by yen