Nikkei rises 0.9 pct but yen weighs

By Aiko Hayashi and Elaine Lies

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 0.9 percent on Wednesday, with investors buying shares on dips after the index hit an eight-month closing low the day before, though rises were limited by the yen’s persistent strength against the dollar.

Nidec Corp (6594.OS: ), a precision motor manufacturer, jumped almost 4 percent after it said it would buy the motors business of U.S. firm Emerson Electric Co (EMR.N: ) in a deal reportedly worth up to $820 million, underscoring a push by Japanese firms to capitalize on a strong yen for overseas acquisitions.

Market players said it was hard to see the benchmark Nikkei average racking up substantial gains without a sustained weakening of the yen even though recent falls, which took it to a 13-month low at 9,065.94 last week, suggest a short-term rebound might be overdue.

“Domestic investors like pension funds likely came in to buy shares of blue-chip companies, with the Nikkei having neared 9,000,” said Masahiko Sato, an executive director at Nomura Securities’s equity marketing department.

“Moves by Japanese companies that are aimed at surviving in the global market will likely increase going forward. But regarding today’s news about Nidec, Nidec has always grown through acquisitions and the news wasn’t big enough of a surprise to further push up the overall market.”

Markets player said they were waiting to see the result of next Monday’s meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa, though many said the chance of it yielding much in the way of policy options is limited.

The government will start to debate stimulus steps on Friday, Economics Minister Satoshi Arai was quoted as saying by Jiji news agency on Tuesday. But the additional stimulus is expected to be relatively modest and will likely involve reallocating funds rather than new spending.

“The market is supported for now on expectations — hope for the Kan-Shirakawa meeting, and hope that the government will do something to rein in the yen or provide economic stimulus,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

The dollar had edged down against the yen to 85.46 yen in Asia trading, slipping back toward a 15-year low of 84.72 yen hit on trading platform EBS last week.

The benchmark Nikkei (.N225: ) gained 78.86 points to 9,240.54. On Tuesday, it finished at its lowest since November 27 last year. The broader Topix (.TOPX: ) rose 1 percent to 835.23.

Whether the Nikkei can stay above 9,000 or not is a big focus this week, market players say, though downside tries have been checked just under 9,100 several times over the last week.

The same level became support several times last year as well, but one market player said things are different this time around, given the sharply stronger dollar.

“If the dollar breaks below 85 yen for a sustained period of time I think the Nikkei will fall below 9,000,” said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Morgan Stanley Securities.

Below that point, the Nikkei’s next support lies at 8,697, a 61.8 percent retracement of the rally between the March 2009 low and the April 2010 high.

Wall Street rose after earnings from Wal-Mart Stores Inc (WMT.N: ) and Home Depot Inc (HD.N: ) beat analyst forecasts. The materials sector handily outperformed the broad market after BHP Billiton Ltd (BHP.AX: )(BLT.L: ) made an unsolicited $39 billion takeover bid for Potash Corp of Saskatchewan Inc (POT.TO: )(POT.N: ).

MORE M&A MOVES ON THE HORIZON?

Nidec Corp rose 3.8 percent to 7,420 yen. The deal marks the latest in a string of acquisitions for Nidec, and comes as the rising yen reignites a push by Japanese companies to snap up overseas assets and secure growth outside their sluggish home market.

“Certainly there’s a lot of interest in M&A by Japanese firms now to take advantage of the stronger yen, but it’s not just a one-way street,” said Fujito at Mitsubishi UFJ Morgan Stanley Securities.

“We’ll see more companies coming to take stakes in Japanese firms as well. Basically there’s a lot of money accumulating globally.”

Exporters gained as well, with Honda Motor Co (7267.T: ) rising 2.4 percent to 2,827 yen and Canon Inc (7751.T: ) up 1 percent at 3,580 yen.

Shares of Nikon Corp (7731.T: ) climbed 1.6 percent to 1,511 yen after Deutsche Securities raised its rating to “buy” from “hold.”

Trade was light, with 1.59 billion shares changing hands on the Tokyo exchange’s first section, though above last Monday’s eight-month low of 1.25 billion shares.

Advancing shares outnumbered declining ones by nearly 3 to 1.

(Editing by Chris Gallagher)

Nikkei rises 0.9 pct but yen weighs