Nikkei rises 1.6 percent on yen and Toyota

By Aiko Hayashi

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.6 percent on Tuesday, with Toyota Motor Corp jumping after detailing plans of its fix for recalled vehicles, while exporters climbed on a weaker yen and strong U.S. manufacturing data.

Resource-linked shares such as trading house Mitsubishi Corp gained ground after oil and gold settled up 2 percent on Monday as commodity markets started February on a steadier note following their worst fall in more than a year last month.

Toyota clung to earlier gains and climbed 4.5 percent, after the automaker’s head of quality acknowledged sales were suffering, though he said he did not know how much it would cost to recall and fix millions of vehicles with faulty accelerators.

But analysts said any overall Nikkei rise would be limited ahead of a slew of events including a Senate hearing on the Obama administration’s proposed new limits on big banks later on Tuesday and U.S. jobs data later this week.

“With expectations gradually receding as earnings are running their course, investors are starting to look to clues about a recovery in the global economy such as the ISM and jobs data,” said Tomomi Yamashita, a senior fund manager at Shinkin Asset Management.

“Another source of concern is moves in emerging countries, and they could limit further gains in the market for now.”

India on Friday raised banks’ cash reserve requirements by more than expected, joining a trend in other major emerging economies toward gradual tightening of loose monetary policies.

China had already started to tighten policy by raising banks’ reserve requirements, clamping down on loan growth and accepting higher yields at bill auctions.

The benchmark Nikkei ended up 166.07 points at 10,371.09.

On Monday the Nikkei briefly fell to 10,129.91, around the level of its 75-day average, which market players said should serve as support for now.

Analysts said the Nikkei is likely to try resistance at 10,600 over the short term, but could fall back and test support if it fails to break decisively above that point.

The broader Topix added 1.6 percent to 912.82.

The Institute for Supply Management’s (ISM) manufacturing index showed U.S. factory activity grew in January at a faster rate than expected, helping send Wall Street higher on Monday.

A market focus is the U.S. nonfarm payrolls report to be issued on Friday. Analysts believe the economy added 5,000 jobs in January, a Reuters poll showed. Another negative surprise after the previous month’s unexpected surge in job losses could roil markets.

Testimony obtained by Reuters showed that Paul Volcker, an economic adviser to President Barack Obama, will say that limiting commercial banks’ ability to engage in proprietary trading — when firms make bets on markets with their own money — will help reduce risk.

“Once some of the details of the banking proposal are out, we may know what direction the proposal will take, whether it will be softer on banks than many worry about or if it will require banks to limit risky assets, and how,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

Some 1.9 billion shares changed hands on the Tokyo exchange’s first section, steadily slowing after marking the highest volume in seven months above 3 billion shares in January.

Advancing stocks outnumbered declining ones by more than 2 to 1.

TOYOTA BOUNCES BACK

The dollar clawed higher against the yen by 0.2 percent to 90.75 yen. Investors fret about a stronger yen because it eats into exporter earnings when repatriated.

Canon Inc rose 2.7 percent to 3,610 yen, Sony Corp climbed 3.1 percent to 3,155 yen and Tokyo Electron gained 2.4 percent to 5,600 yen.

Toyota jumped to 3,605 yen. It detailed plans on Monday to fix nearly 4.5 million vehicles equipped with faulty accelerators in North America and Europe.

But the jump in its shares comes after about an 18 percent tumble over the last seven business days, with investors concerned about the long-term impact on earnings. Toyota is set to report results on Thursday.

Resource-linked stocks gained. Mitsubishi jumped 5.1 percent to 2,249 yen and Mitsui & Co climbed 5.8 percent to 1,368 yen. Oil and gas field developer Inpex gained 2.9 percent to 670,000 yen.

Mitsui & Co also revised up its net profit forecast for the year to March to 140 billion yen ($1.5 billion), up from a previous outlook of 120 billion yen.

Nomura Holdings Inc, Japan’s largest brokerage, reported its third straight quarterly profit, boosted by fees to manage a rush of public share offerings. Prior to the announcement, its shares ended the day up 3.8 percent at 705 yen.

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(Additional reporting by Elaine Lies; Editing by Michael Watson)

Nikkei rises 1.6 percent on yen and Toyota