Nikkei snaps 5-day losing run; eyes on stress tests

* Europe bank tests eyed, but investors wary – analysts

* Nikkei resistance seen at 9,600; support stands at 9,200

* Charts show Nikkei moving away from oversold conditions

* Tokyo bourse may extend trading hours -source

* Hitachi, JFE and construction machinery stocks climb

By Elaine Lies and Aiko Hayashi

TOKYO, July 23 (BestGrowthStock) – Japan’s Nikkei rose 2.3 percent to
snap a five-day losing streak on Friday, boosted as worries about
the results of European bank stress tests eased and by robust
U.S. corporate earnings.

Short-covering helped buoy the benchmark after it shed nearly
6 percent in the past five days, market players said, though
gains were kept in check due to worries about a strong yen and
its impact on domestic corporate earnings.

Charts grew brighter as the Nikkei pulled away from oversold
territory, with its slow stochastic — a measure of how oversold
the market is and whether it is in a short-term up or down trend
— rising after a bullish cross.

But market players noted that volume was only moderate.

“This jump is mainly coming from short-covering, it’s not a
move that will really lead the Nikkei sharply higher,” said
Kenichi Hirano, operating officer at Tachibana Securities.

“But if we manage to close at this level, we may be set for
more gains next week. And while it’s probably not good to be
over-optimistic, I think the stress test results are unlikely to
be that harsh.”

The closely watched results of European banks’ stress tests,
both the aggregate outcome and those of individual banks, will be
released later in the day. [ID:nLDE6601T6] [ID:nLDE660160]

The Nikkei pared some gains late in the session after a
Spanish newspaper said several Spanish savings banks had failed
the stress tests. [ID:nLDE66M041]

In a broad-based advance, the Nikkei (.N225: ) rose 210.08
points to 9,430.96 and marked its biggest one-day percentage gain
since July 14. It edged up a mere 0.2 percent on the week.

The broader Topix (.TOPX: ) rose 1.9 percent to 841.29.

Separately, the Tokyo Stock Exchange [TSE.UL] is considering
extending its trading hours, a person with knowledge of the
matter said — a move that market players said could help it
attract investors and stem a decline in its global
competitiveness. [ID:nTOE66M026]

The exchange, the world’s second largest, may start the
trading day earlier and finish later, and is also considering
eliminating a break between the morning and afternoon sessions,
the person said.

For the Nikkei, resistance is seen at the level of its 25-day
moving average around 9,600. The 25-day moving average is a proxy
for a one-month moving average and is closely watched in Japan.

But market players said a bit of yen weakness was need for
Tokyo stocks to gain genuine strength.

“The gains lack strength because while earnings are on a
strong footing, there is persistent concern about the impact of
the recent strengthing in the yen on future earnings at home,”
said Masaru Hamasaki, senior strategist at Toyota Asset
Management.

Support for the Nikkei likely lies at 9,200, just under its
July 1 close, which was a seven-month closing low, market players
said.

HITACHI JUMPS

Hitachi (6501.T: ) rose 4 percent to 340 yen after the
company’s chairman told Reuters the country’s biggest electronics
maker is likely to have achieved better-than-targeted earnings in
April-June. [ID:nTOE66L06V]

JFE Holdings Inc (5411.T: ), Japan’s second-biggest steelmaker,
jumped 5 percent to 2,698 yen after a Bloomberg report that it
plans to invest about $1 billion in India’s JSW Steel Ltd, citing
a person with knowledge of the deal.

Komatsu Ltd (6301.T: ) and other construction machinery makers
stood out after Caterpillar (CAT.N: ) reported a
stronger-than-expected quarterly profit and raised its full-year
outlook, citing sales growth in emerging markets. [ID:nN22131006]

Komatsu jumped 4.3 percent to 1,796 yen and Hitachi
Construction (6305.T: ) advanced 4 percent to 1,776 yen.

Semiconductor-related shares rose in the wake of gains by
their U.S. peers on Thursday and after Microsoft Corp (MSFT.O: )
reported a 48 percent rise in quarterly profit after the bell,
easily beating Wall Street forecasts.

Chip equipment maker Tokyo Electron (8035.T: ) gained 3.1
percent to 4,670 yen, and stepper maker Nikon (7731.T: ) climbed
2.7 percent to 1,502 yen.

Trade was moderate, with 1.96 billion shares changing hands
on the Tokyo exchange’s first section. Advancing stocks
outnumbered declining ones by nearly 7 to 1.

Investment Research

Nikkei snaps 5-day losing run; eyes on stress tests