Nikkei gains 1.3 percent as exporters and trading firms climb

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.3 percent on Friday in its best one-day performance for two weeks as exporter shares climbed on a halt in the yen’s advance and trading houses gained on higher commodity prices.

But investors remained jittery about Europe’s debt woes and profit-taking pared earlier gains.

U.S. shares rose sharply and the euro climbed on Thursday after China said Europe remains a key investment market for its foreign-exchange reserves and China’s central bank said a Financial Times report on Wednesday that Beijing was concerned about its euro zone bond holdings was groundless.

The report had driven the euro to a near four-year low against the dollar and near an 8-1/2-year low against the yen and pressured global stocks as investors worried that Europe’s debt woes would grow into a larger financial crisis.

“In the short-term a bit of a rebound is likely, since a lot of the worries about the euro zone have now been factored in,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

“Late next week there’s the Group of 20 finance leaders’ meeting as well as U.S. jobs data, which will make it hard to sell substantially over the next week. But today we’re seeing a bit of profit-taking by individual investors.”

The benchmark Nikkei (.N225: ) gained 123.26 points to 9,762.98, moving further away from a six-month low below 9,400 hit the previous day when it ended up 1.2 percent on dip-buying. It lost 0.2 percent on the week for its second successive negative week.

The index’s relative strength index (RSI) climbed to around 36. Anything above 70 is considered overbought and below 30 is considered oversold.

The broader Topix (.TOPX: ) added 1 percent to 878.52.

“In addition to worries about Europe, North Korea and stricter financial regulations, May and November are also generally the months of the year that see a lot of moves by hedge funds to unwind their positions,” said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

“The phase of sharp erosion in sentiment may now be behind us, though unstable stock moves will likely continue for a while.”

A gap opened up last Friday between 10,000 and 9,800 when the Nikkei tumbled 2.5 percent, and Ishiguro said that the Nikkei’s next target was 10,000, a psychological resistance point.

Should the Nikkei break above this, it could then try for 10,300, roughly where its 200-day moving average lies.

EURO FALLS BACK

The euro dipped 0.1 percent against the yen to 112.33 yen, easing back after climbing 2.7 percent on Thursday for its biggest one-day percentage rise in 15 months. (FRX/: )

Many Japanese exporters have set their currency assumption rates for euro/yen at 120-125 yen for the year to March, and a stronger yen erodes exporters’ profits when repatriated.

Sony Corp (6758.T: ) climbed 1.8 percent to 2,838 yen, Canon Inc (7751.T: ) advanced 1.6 percent to 3,740 yen and TDK (6762.T: ) rose 1.5 percent to 5,340 yen, though all pared earlier gains.

Shares of trading houses climbed after commodities prices rose, with copper rising on Thursday to its highest in two weeks as fears about euro zone debt eased and analysts looked to engines of growth outside Europe to keep the economic recovery on track.

Oil jumped 4 percent for its biggest two-day gain since August. (O/R: )

Mitsubishi Corp (8058.T: ) rose 1.4 percent to 2,074 yen and fellow trading firm Mitsui & Co (8031.T: ) gained 1.4 percent to 1,321 yen. Sojitz Corp (2768.T: ) climbed 2 percent to 151 yen.

The Nikkei business daily said a consortium of Sojitz and Shikoku Electric Power Co (9507.T: ) with French energy giant GDF Suez (GSZ.PA: ) won a contract to build and operate a pair of power plants in Oman as independent power producers.

Shares of Promise (8574.T: ) dropped 1.6 percent to 631 yen after Moody’s Investors Service downgraded the consumer lender’s credit ratings. The stock earlier fell as low as 605 yen, its lowest in about five months.

Moody’s downgraded the long-term issuer and senior unsecured debt ratings of Promise to Ba1 from Baa2 and set the outlook as negative, citing uncertainty surrounding its future profitability due to rising credit cost pressure.

Trade was moderate on the Tokyo exchange’s first section, with 2.3 billion shares changing hands.

Advancing stocks outnumbered declining ones by more than 3 to 1.

Investment Analysis

(Additional reporting by Aiko Hayashi; Editing by Chris Gallagher)

Nikkei gains 1.3 percent as exporters and trading firms climb