Nikkei climbs after 16-mth low, China PMI a boost

* China, Aussie data give Nikkei a lift

* Apparent halt in yen advance buoys stocks -analyst

* Next target for Nikkei at 8,697, 61.8 pct retracement

* But investors eye U.S. data, worry about more dlr selling

By Aiko Hayashi and Elaine Lies

TOKYO, Sept 1 (BestGrowthStock) – Japan’s Nikkei average rose 1.2
percent after hitting a 16-month low on Wednesday, drawing
support from a halt in the rapid advance in the yen on a
manufacturing rebound in China and stronger-than-expected growth
in Australia.

Market players said other help came from a slight spike in
dollar/yen after news that Japanese political powerbroker Ichiro
Ozawa, challenging Prime Minister Naoto Kan in a party leadership
vote, said in a policy statement he would implement steps
including currency intervention if the yen rose rapidly.

“Investors welcomed growing signs of a halt in the advance in
the yen against the dollar, stemming from yen crosses after
Australian growth data showed improvement and China’s data came
in strong,” said Hiroaki Kuramochi, chief equity marketing
officer at Tokai Tokyo Securities.

“Ozawa’s comment on intervention is probably an additional
positive factor, but the main catalysts for stock gains are signs
of a halt in the yen’s rapid advance and the solid performance in
other Asian stocks.”

The benchmark Nikkei (.N225: ) ended up 102.96 points at
8,927.02, after earlier falling as low as 8,796.45, its lowest
since April 2009, helped by what some market players said was
buying by domestic institutional investors at lows.

The broader Topix (.TOPX: ) added 0.8 percent to 811.40.

China’s official purchasing managers’ index rose to 51.7 in
August from a 17-month low of 51.2 in July, while Australia’s
economy grew a stronger-than-expected 1.2 percent in the second
quarter. [ID:nBJB003928] [ID:nSYU010570]

The Australian dollar rose 1.3 percent to 76.01 yen
(AUDJPY=R: ) and the greenback edged up 0.3 percent to 84.47 yen
(JPY=: ). [FRX/]

Ozawa said in a statement that he would use 2 trillion yen
($23.76 billion) of reserve funds in the budget for the current
fiscal year to next March for economic steps.

But market players said some investors were likely to stay on
the sidelines with the battle between Kan and Ozawa for
leadership of the ruling party, and hence the premiership,
opening on Wednesday. The party will hold its leadership vote on
Sept. 14. [ID:nTOE68000C]

Shortly after the opening the benchmark fell below 8,800 for
the first time in 16 months, with market players saying sentiment
remained fragile with investors worried about possible negative
surprises from a slew of U.S. indicators due out this week,
including jobs data.

ADP private employers data is due out later on Wednesday,
with non-farm payrolls on Friday.

“A decline from the previous month is forecast for the ADP
data, although it is still likely to be positive, and this may
well be factored in, but the market is nervous that the figures
could perhaps even turn negative,” said Hideyuki Ishiguro, a
strategist at Okasan Securities.

“This sort of negative surprise could lead to more dollar
selling, and this has investors worried.”

The next technical level for the Nikkei if it resums falling
is 8,697, a 61.8 percent retracement of the rally from its March
2009 low to its April 2010 high.

HITACHI UP, CHINA-LINKED STOCKS HIGHER

Shares of Hitachi Ltd (6501.T: ) climbed 2.4 percent to 348 yen
after sources familiar with the matter said the company is
planning an initial public offering of its hard-drive unit in the
United States, possibly by the year-end.

Sources said bankers are in discussion with the Japanese
company about an IPO and underwriters could be named in early
September. The hard-drive unit, Hitachi Global Storage
Technologies (HGST), is the world’s No.3 hard drive maker and
analysts said it could be valued at about $3 billion.
[ID:nN25165909]

Shares of companies with strong businesses in China gained,
with Hitachi Construction (6305.T: ) up 1.9 percent at 1,700 yen
and Komatsu (6301.T: ) rising 1.2 percent to 1,726 yen.

Tech shares that were sold sharply on Tuesday, such as Canon
Inc (7751.T: ), crawled higher, but some blue-chip shares hit
multimonth lows on persistent worries about the strong yen’s
impact on their earnings.

Toyota Motor Corp (7203.T: ) ended down 0.1 percent at 2,857
yen after falling as low as 2,806 yen, its lowest in about 17
months.

Toshiba Corp (6502.T: ) was down 2 percent at 387 yen after
hitting its lowest in 13 months and Sharp Corp (6753.T: ) was down
0.9 percent at 797 yen after touching its lowest in 17 months.

Some 1.6 billion shares changed hands on the Tokyo exchange’s
first section, its highest volume this week, albeit light.

Advancing shares outnumbered declining ones 862 to 649.
(Editing by Michael Watson)

Nikkei climbs after 16-mth low, China PMI a boost