Nikkei up 1.5 pct on EU crisis plan; caution remains

* Nikkei rises on short-covering after sharp loss last week

* Hope of euro aid plan a plus, but gains kept in check

* Resistance likely at 10,600, level of 100-day MA -analyst

* Toray jumps on deal with Airbus; Softbank climbs on iPad

By Aiko Hayashi

TOKYO, May 10 (BestGrowthStock) – Japan’s Nikkei average rose 1.5
percent on Monday, buoyed by a technical rebound after falling
over 6 percent last week and by a massive stabilisation plan for
the euro zone to keep Greece’s fiscal woes from spreading.

Toray (3402.T: ) jumped after signing a 15-year contract with
Airbus (EAD.PA: ) to supply carbon fibre materials for the European
firm’s aircraft, while Softbank (9984.T: ) rose on news it would
start selling Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPad tablet computer in Japan
on May 28.

The market took heart from news that European Union finance
ministers had agreed an emergency loan package that with IMF
support could reach 750 billion euro ($1 trillion) to prevent a
sovereign debt crisis spreading through the euro zone.

The European Central Bank also announced steps to contain
Greece’s debt crisis, saying it would buy euro zone government
and private debt and abandoning resistance to full-scale bond
purchases. [ID:nLDE64900T]

Major global central banks also moved to support Europe,
reestablishing dollar swap facilities used during the 2007-2008
financial crisis to help ease strain on financial markets and
ensure there was enough liquidity to keep global credit markets
from seizing up.

Tokyo market players were optimistic but wary, noting that
the Nikkei had been on the brink of oversold territory last week
in the wake of a massive global stock slide and was due for a
bounce anyway. They also cited persistent worries about
deep-rooted debt problems in Europe.

“The market welcomed a string of efforts to secure stability
in liquidity,” said Kazuhiro Takahashi, general manager at Daiwa
Securities Capital Markets.

“But profit-taking is keeping gains in check as the news had
been gradually factored in and it’s not as if the core problems
have been sorted out yet.”

U.S. stock futures (SPc1: ) rose 2.9 percent, helping the
benchmark Nikkei (.N225: ) climb 149.84 points to 10,514.43. The
broader Topix (.TOPX: ) rose 1.1 percent to 942.22.

Market players said that support was likely to solidify at
the level of the Nikkei’s 200-day moving average — around 10,300
— after the benchmark managed to close above it last week.

The Nikkei’s relative strength index (RSI) edged up slightly
to 39 after falling to its lowest since November on Friday.
Anything from 30 and below is regarded as oversold territory.

Resistance is likely to hold for now at 10,600, the level of
the Nikkei’s 100-day moving average.

“Investors now want to see how European and U.S. stocks (Read more about the stock market today. )
perform overnight. Caution also remains as reasons behind the
abnormal slide in U.S. stocks (Read more about the stock market today. ) last week still haven’t been
identified,” Takahashi said.

Eyes are on Wall Street this week with markets still jittery
after Thursday’s nearly 1,000-point drop in the Dow Jones
Industrial Average, followed by a rebound that still left prices
down for the day.

In the latest development, the heads of leading U.S. stock
market operators have been called to Washington for an emergency
meeting on Monday, days after the spine-chilling plunge in stock
prices continued to perplex U.S. regulators. [ID:nN09274100]

TORAY, BRIDGESTONE SHINE

Shares of Toray (3402.T: ) climbed 4.3 percent to 538 yen.

The Japanese textile maker said it has not yet determined the
value of the deal with Airbus but the Nikkei business daily
reported that it could be worth 200 billion yen to 300 billion
yen ($2.2 billion-$3.3 billion). [ID:nTOE64900A]

Softbank Corp (9984.T: ) jumped 3.9 percent to 2,151 yen,
rebounding after falling for the past four trading sessions, as
it is set to sell Apple’s iPad tablet computer in Japan later
this month. [ID:nN07271476]

Bridgestone Corp (5108.T: ) advanced 4.3 percent to 1,628 yen
after Japan’s largest maker of tyres said it has raised its
operating profit forecast for the six months to June by 61
percent to 50 billion yen ($546 million) on the back of brisk
sales.

Shares of companies with exposure to China gained after
sliding last week on a combination of worries about Chinese
monetary tightening and a fall in Shanghai shares.

Machinery maker Komatsu (6301.T: ) rose 1.9 percent to 1,794
yen and shipper Kawasaki Kisen (9107.T: ) climbed 3.9 percent to
376 yen. Hitachi Construction (6305.T: ) gained 2.1 percent to
1,945 yen.

But shares of Panasonic (6752.T: ) fell 2.2 percent to 1,281
yen after the world’s No.4 flat TV maker forecast full-year
operating profit figures below market expectations.

Panasonic expects its operating profit to total 250 billion
yen ($2.7 billion) in the year to March 2011, up 31 percent from
a year earlier, when profit more than doubled. But the estimate
fell short of the 276.5 billion yen consensus from a poll of 20
analysts by Thomson Reuters I/B/E/S. [ID:nTOE64606D]

Stock Market Basics

(Additional reporting by Elaine Lies; Editing by Joseph Radford)

Nikkei up 1.5 pct on EU crisis plan; caution remains