Nikkei rises on yen, GDP

By Aiko Hayashi and Chikafumi Hodo

TOKYO (BestGrowthStock) – Japan’s Nikkei average rose 1.1 percent on Monday, back toward a 4- month high hit last week as a softer yen and stronger-than-expected Japanese growth data for July-September encouraged investors to buy on dips.

The technical trend for the Nikkei remained bullish, with sporadic buying emerging after profit-taking hit the benchmark on Friday.

“The market was helped by stabilizing currencies and after the better-than-expected GDP, which seems to have accelerated bond selling, with some of that money going into stock futures,” said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

The Nikkei’s climb contrasts with other major stock markets. Wall Street ended a five-week winning steak on Friday and China’s key stock index (.SSEC: ) inched lower, both hurt by the threat of rising interest rates in China.

“U.S. stocks (Read more about the stock market today. ) and Chinese stocks have taken a breather for now, but it’s not as if investors are suddenly turning risk averse. They will likely continue to find it relatively easy to take risk as liquidity is expanding after ‘QE2.'”

On Friday, the U.S. central bank initiated a second round of quantitative easing, known as “QE2.” The program is worth about $600 billion in Treasury purchases over an eight-month period.

The Nikkei (.N225: ) ended the day up 102.70 points at 9,827.51, with some market players citing help from buying by European investors. It recouped most of the losses it made on Friday and is not too far off its a 4- month high of 9,885.37 seen earlier last week.

The broader Topix (.TOPX: ) was up 0.5 percent on Monday at 851.56.

Japanese government bond yields climbed to two-month highs.

Some traders said the Nikkei received support after data showing Japan’s economy grew a bigger-than-expected 0.9 percent in July-September from the previous quarter. But most participants said the GDP results were neutral to the market.

“The GDP results were positive, although they failed to spur strong buying as there are many uncertainties about the economic outlook,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

Resistance was seen lurking around 9,800, and a decisive break above the level will likely open the way to a climb toward 10,000, traders say. The next target is then expected to be around its June high of 10,251.90.

The Nikkei is likely to find support around 9,500, near its 26-week moving average.

EXPORTERS UP

In Asian trade, the dollar inched higher to 82.76 yen, encouraging gains for exporters like Sony (6758.T: ).

After the stock market close, the greenback extended gains to a fresh five-week high against the yen as rising U.S. bond yields prompted further short-covering in the U.S. currency. (FRX/: )

Shares of Sony climbed 2.7 percent at 2,790 yen and Kyocera (6971.T: ) gained 2.7 percent to 8,610 yen. Honda Motor Co (7267.T: ) rose 1.7 percent to 3,035 yen.

But resource-linked shares slipped after major commodities fell by the most in months on Friday on concern China will raise interest rates to slow growth, halting a rally that has seen raw goods prices surge to multiyear highs. (COM/WRAP: )

Sumitomo Metal Mining (5713.T: ) fell 1.4 percent to 1,350 yen and Dowa Holdings (5714.T: ) slid 2.1 percent to 511 yen. The nonferrous metals subindex (.INFRO.T: ) was down 0.2 percent.

Trade was light on the Tokyo exchange’s first section, with 1.69 billion shares changing hands, its lowest in a week.

Advancing stocks outnumbered decliners, 945 to 549.

(Editing by Edwina Gibbs)

Nikkei rises on yen, GDP