Nikkei jumps 1.9 percent, highest close since Mar 11 quake

By Chikafumi Hodo and Antoni Slodkowski

(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 (9501.T: Quote, Profile, Research) and a government plan to avoid rolling power blackouts.

A jump in popular stock Fast Retailing (9983.T: Quote, Profile, Research), 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 (.N225: Quote, Profile, Research) 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 (.TOPX: Quote, Profile, Research) 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.

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 percent, highest close since Mar 11 quake