Nikkei climbs over 1 pct amid euro plan talk

* Nikkei jumps on short-covering after sharp loss last week

* Hope of euro aid plan a plus, but gains likely limited

* Resistance likely at 10,600, level of 100-day MA -analyst

* Toray soars after winning deal with Airbus

By Elaine Lies

TOKYO, May 10 (BestGrowthStock) – Japan’s Nikkei average gained 1.3
percent on Monday, buoyed by a technical rebound after falling
over 6 percent last week and by a massive stabilisation plan for
the euro zone to keep Greece’s fiscal woes from spreading.

Shares of Toray (3402.T: ) climbed 4.5 percent to 539 yen after
the Japanese textile maker said it has signed a 15-year contract
with Airbus (EAD.PA: ) to supply carbon fibre materials for the
European firm’s aircraft.

The European Union agreed on a 500 billion euro ($670
billion) emergency fund as it struggles to keep Greece’s debt
problems from spreading to other countries [ID:nLDE64900T]

Tokyo market players were optimistic but wary, noting that
the Nikkei had been on the brink of oversold territory last week
in the wake of a massive global stock slide and was due for a
bounce anyway.

“The fact that a concrete plan has finally emerged has
boosted U.S. stock futures and raised hopes for a rebound in
European and U.S. markets tonight, which is setting off
short-covering,” said Hiroaki Osakabe, a fund manager at Chibagin
Asset Management.

“The scale of the plan is bigger than expected and this is
likely to be taken positively. But while things may settle down
for now, the mid- and longer-term is a bit more uncertain.”

U.S. stock futures (SPc1: ) rose 2.5 percent, helping the
benchmark Nikkei (.N225: ) climb 134.66 points to 10,499.25. The
broader Topix (.TOPX: ) rose 1 percent to 940.70.

Market players said that support was likely to solidify at
the level of the Nikkei’s 200-day moving average — around 10,300
— after the benchmark managed to close above it last week.

The Nikkei’s relative strength index (RSI) edged up slightly
to 39 after falling to its lowest since November on Friday.
Anything from 30 and below is regarded as oversold territory.

Resistance is likely to hold for now at 10,600, the level of
the Nikkei’s 100-day moving average.

“There was quite an expansion of risk aversion that led to a
massive slide in global stocks last week, but there’s a chance
that things may settle down now,” said Hiroichi Nishi, general
manager at the equity division of Nikko Cordial Securities.

Shares of companies with exposure to China gained after
sliding last week on a combination of worries about Chinese
monetary tightening and a fall in Shanghai shares.

Machinery maker Komatsu (6301.T: ) rose 1.8 percent to 1,792
yen and shipper Kawasaki Kisen (9107.T: ) climbed 2.5 percent to
371 yen. Hitachi Construction (6305.T: ) gained 1.6 percent to
1,936 yen.

Shares of Panasonic (6752.T: ) fell 1.5 percent to 1,290 yen
after the world’s No.4 flat TV maker forecast full-year operating
profit figures below market expectations.

Panasonic expects its operating profit to total 250 billion
yen ($2.7 billion) in the year to March 2011, up 31 percent from
a year earlier, when profit more than doubled. But the estimate
fell short of the 276.5 billion yen consensus from a poll of 20
analysts by Thomson Reuters I/B/E/S. [ID:nTOE64606D]

Investment Research

(Reporting by Elaine Lies; Editing by Joseph Radford)

Nikkei climbs over 1 pct amid euro plan talk