Nikkei clings to gains but off highs; Nidec strong

* Short-covering boosts Nikkei but yen limits gains

* Market awaits Kan-Shirakawa meeting, hopes for policy

* Nidec jumps after saying will buy Emerson unit

By Elaine Lies

TOKYO, Aug 18 (BestGrowthStock) – Japan’s Nikkei average edged up 0.4
percent on Wednesday, buoyed by short-covering after two days of
falls this week, though rises were limited by the yen’s
persistent strength against the dollar.

Nidec Corp (6594.OS: ), a precision motor manufacturer, jumped
nearly 5 percent after the firm said it would purchase the motors
business of U.S. firm Emerson Electric Co (EMR.N: ).
[ID:nTOE67G083]

Market players said it was hard to see the benchmark Nikkei
racking up substantial gains without a sustained weakening of the
yen even though recent falls — which saw it lose 4 percent last
week — suggest a short-term rebound might be overdue.

“Today we’re seeing short-covering prompted by the overnight
Wall Street rise, but the main players are day traders and they
tend to dump shares fairly quickly when any rises lose steam,”
said Norihiro Fujito, general manager of the investment research
and information division at Mitsubishi UFJ Morgan Stanley
Securities.

“Markets are waiting to see the result of next week’s meeting
between (Prime Minister Naoto Kan) and Bank of Japan Governor
Masaaki Shirakawa, but the chance of this yielding much in the
way of policy options is limited.”

A government source said on Tuesday that the meeting is
expected next Monday. [ID:nTOE67G02K]

The government will start to debate stimulus steps on Friday,
Economics Minister Satoshi Arai was quoted as saying by Jiji news
agency on Tuesday. But the additional stimulus is expected to be
relatively modest and is likely to involve reallocating funds
rather than new spending.

“The market is supported for now on expectations — hope for
the Kan-Shirakawa meeting, and hope that the government will do
something to rein in the yen or provide economic stimulus,” said
Noritsugu Hirakawa, a strategist at Okasan Securities.

The dollar had edged down against the yen to 85.38 yen (JPY: )
by midmorning.

The benchmark Nikkei (.N225: ) gained 37.89 points to 9,199.57
after closing at its lowest in more than eight months on Tuesday.
The broader Topix (.TOPX: ) rose 0.6 percent to 831.73.

Whether the Nikkei can stay above 9,000 or not is a big focus
this week, market players say, though downside tries have been
checked just under 9,100 several times over the last week.

The same level became support several times last year as
well, but Fujito said things are different this time around,
given the sharply stronger dollar.

“If the dollar breaks below 85 yen for a sustained period of
time I think the Nikkei will fall below 9,000,” he added.

Below that point, the Nikkei’s next support lies at 8,697, a
61.8 percent retracement of the rally between the March 2009 low
and the April 2010 high.

EARNINGS, DATA

Wall Street rose after earnings from Wal-Mart Stores Inc
(WMT.N: ), the world’s largest retailer, and Home Depot Inc (HD.N: )
beat analyst forecasts. [ID:nN17234410] [ID:nN17114618]

U.S. data released on Tuesday was mixed, with producer prices
rising in July for the first time in several months and
industrial production expanding at twice the expected pace,
boosting the dollar slightly, though housing starts posted a
weaker-than-expected rise. [ID:nN17118370] [ID:nN17175177]

Nidec Corp rose 4.9 percent to 7,500 yen after saying on
Wednesday that it would buy the motors and controls business of
U.S. firm Emerson Electric Co (EMR.N: ), in a move the Nikkei
business daily said could be worth as much as $820 million.

The deal marks the latest move in Nidec’s aggressive
expansion through acquisitions, and comes as the rising yen
reignites a push by Japanese companies to snap up overseas assets
and secure growth outside their sluggish home market.
[ID:nTOE679050]

Exporters gained as well, with Honda Motor Co (7267.T: ) rising
1.9 percent to 2,813 yen and Canon Inc (7751.T: ) up 1 percent to
3,580 yen. Kyocera Corp (6971.T: ) climbed 0.3 percent to 7,610
yen, having pared earlier gains.

Commodities-linked firms gained as well after metals prices
climbed on Tuesday, with copper rising to a one-week high on
Tuesday and other metals, such as nickel, also posting strong
gains. [ID:nnLDE67G0VF]

Mitsubishi Corp (8058.T: ), Japan’s largest trading house, rose
2 percent to 1,876 yen and fellow trader Mitsui & Co (8031.T: )
gained 2.4 percent to 1,193 yen.

Shares of Nikon Corp (7731.T: ) climbed 1.8 percent to 1,514
yen after Deutsche Securities raised its rating to “buy” from
“hold”.
(Reporting by Elaine Lies; Editing by Chris Gallagher)

Nikkei clings to gains but off highs; Nidec strong