Nikkei hits one-week closing high on Spain plan, earnings

By Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose over 2 percent to a one-week closing high on Thursday after Spain outlined measures to cut its deficit, easing fears the Greek debt crisis could spread in Europe and boosting exporters such as Advantest (6857.T: ).

Shares of companies with upbeat earnings and outlooks found favor as well, with information services company CSK Holdings (9737.T: ) surging more than 14 percent after it forecast a jump in profit this financial year.

Concerns that Greece’s debt crisis could spill over to other euro zone nations with high borrowing levels eased on Wednesday as Spanish Prime Minister Jose Luis Rodriguez Zapatero said Madrid would slash civil service pay by 5 percent this year, freeze it in 2011 and cut 13,000 public sector jobs.

The news sent European and U.S. stocks (Read more about the stock market today. ) higher and boosted Asian stocks as well, with rises in Hong Kong and Seoul shares helping the Nikkei in turn, market players said.

“The euro zone problems had really weighed on the market, and reassurance after the Spanish announcement has allowed investors to turn their eyes to things like earnings and economic indicators for the first time in days,” said Toshiyuki Kanayama, a market analyst at Monex Inc.

“That said, we can’t know yet if these measures will work, and some continuing concern is still shifting funds into gold, sending it to quite high levels.”

The benchmark Nikkei (.N225: ) was up 2.2 percent or 226.52 points to 10,620.55, its highest close since last Thursday. The broader Topix (.TOPX: ) added 1.6 percent to 947.90.

Gold held steady near a record high reached in the previous session and Asian shares on the MSCI ex-Japan index (.MIAPJ0000PUS: ) rose 2.1 percent. (GOL/: )

The Nikkei’s relative strength index (RSI) rose to 44.3, its highest in a week. Anything from 30 and below is considered oversold.

Kanayama said the first target for the Nikkei would be 10,700, which is not only a level at which the Nikkei had consolidated several times earlier this year but also marks the upper limit of a gap opened when it fell sharply last week.

Others said the Nikkei was likely to move swiftly higher.

“Japanese corporate earnings have also been good. This apparent improvement in earnings should mean a correction in stock prices,” said Mitsuo Shimizu, deputy general manager at Cosmo Securities.

“The Nikkei could find its way up to its 25-day moving average around 11,000 in the short-term.”

Just after the close, Sony Corp (6758.T: ) forecast a jump in annual operating profit, but its outlook fell short of market expectations.

Its shares closed up 4.1 percent to 3,165 yen.


Exporter shares gained to help push up the overall market. Advantest Corp jumped 3.2 percent to 2,342 yen and TDK Corp (6762.T: ) advanced 4.6 percent to 6,210 yen.

CSK Holdings shot up 14.1 percent to 494 yen. The company estimated annual operating profit at 10 billion yen, beating an average of 7.7 billion yen from two analysts polled by Thomson Reuters I/B/E/S.

Shares of Tokyo Electron (8035.T: ) jumped 7 percent to 6,080 yen after the chip equipment maker forecast it would swing to profitability in the year to March 2011, citing an expected increase in capital investment by semiconductor makers.

Tokyo Electron expects to book an operating profit of 79 billion yen for the year, compared with an operating loss of 2.2 billion yen the year before.

But Nissan Motor Co (7201.T: ) slipped 1.3 percent to 735 yen after Japan’s No.3 automaker said it expects growth in emerging markets and launches of new models such as its Micra compact to provide only a modest boost to profits this year.

Nissan forecast an annual operating profit of 350 billion yen, up 12 percent from the 311.6 billion yen it made last year but lagging a consensus forecast of 411 billion yen in a poll of 22 analysts by Thomson Reuters I/B/E/S. [ID:nTOE64A065]

Trade was moderate, with 2.3 billion shares changing hands on the Tokyo exchange’s first section, down from the 3.1 billion, a four-month high, marked last Friday and the lowest volume this week.

Advancing shares beat declining ones by more than 3 to 1.

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(Additional reporting by Aiko Hayashi; Editing by Joseph Radford)

Nikkei hits one-week closing high on Spain plan, earnings