Nikkei gains 1.3 percent as Greece worries ease

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.3 percent on Friday, with investors hunting bargains in exporters and other shares after a pledge by European leaders to support debt-laden Greece eased fears of a broader euro zone crisis.

Mitsubishi Corp and other resource shares gained after metals rose on Chinese data showing banks had made stronger-than-forecast loans in January, while consumer inflation moderated more than expected in the year to January.

European leaders said on Thursday they had struck a deal to help heavily indebted Greece, an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro single currency. But no details were announced.

“A series of negative factors such as concerns about Greece’s problems and China’s tightening policy are now priced in. But we still lack reasons to buy up the market further,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

“Worldwide economic measures, which have helped improve corporate earnings and the economy, are gradually coming to an end and there’s a sense of uncertainty about what will happen after those programs actually end.”

Analysts also said that while recent risk aversion arising from concern about the fiscal stability of Greece, Portugal and Spain had eased enough to help all three Wall Street indexes rise more than 1 percent, there were still many uncertainties about the fiscal outlook for Europe.

“The pledge of support is basically just what you’d expect — European leaders can hardly say they’ll just ignore Greece,” said Kenichi Hirano, operating officer at Tachibana Securities.

“The really important thing is how they’ll carry out this support, and that’s something we don’t know yet. Gains in Tokyo today are mainly due to bargain-hunting.”

The benchmark Nikkei closed up 128.20 points at 10,092.19, its highest close in a week. On the week, it rose 0.3 percent.

The broader Topix gained 1 percent to 892.16.

Hirano said support for the Nikkei was solidifying around the level of its 200-day moving average just under 10,000 after the benchmark broke below that earlier this week.

Its next target is 10,160, where its 75-day average currently comes in, and then 10,275, where a gap was created on daily charts during the Nikkei’s slide last week. Chart gaps can sometimes be targets to be filled in a correction.

Trading energy was also dampened by investor wariness ahead of next week’s Lunar New Year holiday in China.

EXPORTERS, RESOURCE STOCKS HELP

Exporters were one target of bargain-hunters, with Sony Corp rising 1.5 percent to 3,065 yen and Toshiba Corp gaining 2.6 percent to 431 yen.

Toyota Motor Corp rose 2.1 percent to 3,460 yen after the Asahi newspaper reported that President Akio Toyoda would attend U.S. congressional hearings set for February 24-25 and March 2 to explain a series of safety issues.

Separately, the Yomuiri newspaper reported that in an effort to regain its standing with customers, Toyota has decided to publicize all car problems including the ones which are not subject to recalls.

Copper rallied on Thursday to a two-week high and other metals gained across the board also after the Chinese data, with the lower inflation numbers easing fears of an imminent hike in official benchmark deposit and lending rates.

Mitsubishi Corp climbed 3.3 percent to 2,225 yen and fellow trader Mitsui & Co gained 5.6 percent to 1,350 yen. Pacific Metals, a maker of ferronickel, jumped 7.3 percent to 617 yen.

Shares of Nippon Denko Co shot up 6.3 percent to 557 yen after Nippon Steel said it will raise its stake in the ferroalloy maker to 15 percent from 9.5 percent as part of an alliance between the two firms. Nippon Steel was flat at 323 yen.

Dentsu Inc rose 5.5 percent to 2,107 yen after J.P. Morgan raised its rating on the company to “overweight” from “neutral”, citing better-than-expected ad revenue and cost control.

But consumer finance firm Promise Co bucked the trend, sliding 7 percent to 690 yen after the company’s president told Reuters he expects its outstanding loan balance to shrink by about 30 percent in the next three years due to stricter regulations.

Volume on the Tokyo exchange’s first section picked up slightly to 2.1 billion shares. Advancing stocks outnumbered declining ones by 2 to 1.

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(Additional reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei gains 1.3 percent as Greece worries ease