Nikkei hits 5-month closing high, weak yen helps

By Antoni Slodkowski

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 0.9 percent on Monday to its highest close in five months as the yen softened against the dollar, but the gains were capped by profit-taking and concerns over the euro zone and North Korea.

The yen hit a fresh two-month low against the dollar in early Asia trade, lifting shares of exporters such as Sony Corp and helping the market to regain a positive tone that has fueled a rally of about 10 percent this month.

Market participants said an 85 billion euro ($112 billion) bailout of Ireland had calmed markets for now, but in the long run there were fears that contagion would strike fellow strugglers Spain and Portugal.

“The dollar moving above 84 yen is the biggest supporting factor today,” said Koichi Nosaka, a market analyst at Securities Japan, Inc.

The benchmark Nikkei added 86.43 points to 10,125.99, its highest finish since June 21.

The broader Topix index advanced 0.9 percent to 874.59.

But market players said Tokyo stocks will struggle to post further quick gains.

“There are too many economic and political uncertainties for the market to go much higher than this. We don’t know what North Korea will do next,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

Caution ahead of eagerly awaited U.S. employment figures due on Friday was also preventing investors from taking more active positions.

“Above 10,100, profit-taking tends to emerge, because the Nikkei has risen so much over such a short period of time,” Akino said.

EXPORTERS HELP

If the Nikkei can hold above 10,100 in the near term that would boost the confidence of retail investors, and in turn possibly set the stage for a climb as high as 10,700, he added.

Foreigners have been shifting funds back to lagging Tokyo equities after U.S. monetary easing lifted expectations of more liquidity in financial markets.

If the Nikkei ends November up more than 9.5 percent — it is up 10.6 percent as of Monday’s close — it would score its biggest monthly percentage gain since last December.

“It’s not just short-covering by foreign fund managers. About 20 to 30 percent of these fund flows are new and come mostly from European pension funds,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

So far this year, Japanese shares have lost about 4 percent, while Hong Kong’s benchmark Hang Seng Index has gained nearly 5 percent and Wall Street’s Dow Jones index is up 6.4 percent.

Financial shares, most likely to be affected by debt woes in the euro zone, were in line with the broader market, with banking stocks up 0.9 percent.

Market players said strong sales on the biggest shopping day in the United States, Black Friday, which follows Thanksgiving, also bolstered Japanese stocks.

Shares of exporters gained as the yen weakened, with Sony Corp rising 2.8 percent to 2,970 yen and Kyocera Corp up 1.9 percent at 8,600 yen. Honda Motor Co was up 0.7 percent at 3,095 yen.

Toshiba Corp climbed 2.8 percent to 436 yen after saying it planned to cooperate with a Mongolian consultancy to explore rare earths, uranium and other minerals in resource-rich Mongolia.

But Kagome Co fell 2.3 percent to 1,486 yen after the maker of tomato juice and ketchup said the Bank of Tokyo-Mitsubishi UFJ would sell up to 2.23 million shares, or 2.2 percent of outstanding shares, in the company through a secondary offering.

Trading volume was light on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, down from Friday’s 1.9 billion shares.

(Additional reporting by Aiko Hayashi; Editing by Edmund Klamann)

Nikkei hits 5-month closing high, weak yen helps