Nikkei jumps 1.9 pct, highest close since Mar 11 quake

By Chikafumi Hodo and Antoni Slodkowski

April 8 (Reuters) – Japan’s Nikkei stock average jumped 1.9
percent to close at its highest since the March 11 earthquake,
with short-covering encouraged by an “outperform” rating for
beleaguered Tokyo Electric Power and a government plan
to avoid rolling power blackouts.

A jump in popular stock Fast Retailing , which
operates the Uniqlo discount clothing chain, after it lifted its
annual earnings outlook and a better-than-expected settlement
for April options prices also bolstered sentiment.

Commodity trading advisers in the Nikkei futures market
helped lead the short-covering while gains in commodity prices
and further declines in the yen against the euro helped as well.

“There is no clear way you can explain today’s rally. TEPCO
shares’ sharp gains, the government’s plan to avoid rolling
blackouts and the yen’s weakness are all positive factors, but
again, you really can’t pinpoint the exact factor,” said
Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

The benchmark Nikkei closed up 1.9 percent or 177.15
points at 9,768.08, its highest close since March 11 and the
biggest percentage gain for a single day since March 30.

It also finished above its closely watched 25-day moving
average, now around 9,716, for the first time since March 4, and
the next key resistance level is its 200-day moving average at
9,834.

The broader Topix ended up 1.4 percent or 12.03
points at 853.13.

Shares of Tokyo Electric jumped by one-fourth on Friday
after Mizuho Securities reiterated its “outperform” rating on
the operator of a crippled nuclear plant and set a target price
more than double the current level. [ID:nL3E7F80O5]

TOKYO ELECTRIC

Volume in Tokyo Electric’s shares spiked to the second
highest since the quake, accounting for more than 8 percent of
overall volume on the Tokyo bourse’s first section. Traders
turned over roughly 230 million of its shares as the stock
surged by its daily limit in the last minutes of trade.

Mizuho set its target price at 900 yen, roughly equal to its
forecast for book value per share at the end of the current
financial year in March 2012.

Tokyo Electric shares, which have tumbled more than 80
percent since the quake, surged 80 yen or 24 percent to finish
at 420 yen.

But the market was still unclear about the outlook for
Japanese shares in the long run.

“People are buying shares for now, but it’s not going to
last long,” said Mitsushige Akino, chief fund manager at
Ichiyoshi Investment Management.

“Fundamentals remain unclear and extreme uncertainty
surrounds earnings, with many firms set to provide no annual
forecasts, which will keep a lid on the market’s gains.”

Tokyo shares have regained more than half of the ground
lost since March 11 but power shortages, lost production and
lack of progress in bringing the stricken nuclear plant under
full control could send the Nikkei to 9,200-9,300 around
mid-May, some analysts said.

Shares in Fast Retailing jumped 7.3 percent to 11,940 yen
after it raised its operating profit forecast for the business
year to the end of August to 121.5 billion yen ($1.43 billion),
down 8.2 percent from a year ago but above an earlier projection
of 113.5 billion yen.

Volume climbed to 2.8 billion shares on the Tokyo stock
exchange’s first section, in line with elevated levels after the
quake. Advancing shares outnumbered decliners by 1,357 to 224.

(Editing by Edwina Gibbs)

Nikkei jumps 1.9 pct, highest close since Mar 11 quake