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Nikkei edges higher, but exporters weigh

Published 08/10/2009, 09:27 PM
Updated 08/10/2009, 09:30 PM
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* Nikkei clings near 10-month high, eyes 10,800 target * Light profit-taking hits exporters as yen edges higher

* Impact from earthquake seen slight

TOKYO, Aug 11 (Reuters) - Japan's Nikkei stock average edged up 0.3 percent on Tuesday towards a 10-month high, but gains centred on defensive stocks while Honda Motor and other exporters slipped as the yen advanced against the dollar.

A strong earthquake shook Tokyo and surrounding areas on Tuesday morning, but the impact was expected to be little to nil, with many factories in the area closed for summer vacation.

Analysts said that while the market was vulnerable to profit-taking after its recent gains, bargain hunting on dips would keep the downside supported and its recent upward trend was unchanged.

"The U.S. jobs figures have improved the consensus now so that more people are getting a sense the economy may have bottomed out, so the trend is upwards," said Hiroaki Osakabe, a fund manager at Chibagin Asset Manager.

"But U.S. consumption still hasn't recovered, so there may very well be some downward adjustments, and any rise by the Nikkei to 12,000 is likely to take several months and require real proof of recovery in the larger economy."

In figures announced on Friday, the U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected and that lifted Wall Street on Friday.

U.S. stocks fell on Monday as investors booked profits following a four-week rally that took the broad S&P 500 index to a 10-month high on Friday.

The benchmark Nikkei gained 29.80 points to 10,554.06, heading up towards a 10-month high of 10,585.37 hit on Monday, while the broader Topix rose 0.2 percent to 970.72. The Nikkei's next target is likely to be 10,800 -- a 50 percent Fibonacci retracement from its June 2008 high and last October's 26-year low just under 7,000 -- followed by 11,000, roughly the level from which it fell rapidly after Lehman Brothers failed last September.

Major manufacturers including Suzuki Motor, Yamaha Motor, Panasonic, Sony and Fujitsu Ltd said they had not seen damage to their factories in the area of the quake.

Toshiba Corp edged up 0.9 percent to 465 yen after it said it will join the Blu-ray Disc Association -- its former enemy in a bitter format war -- to make blu-ray players by the year-end to tap demand for high-definition home movies.

Otherwise, advancing shares centred on so-called defensive shares such as medical equipment maker Terumo, which gained 1.5 percent to 4,830 yen, and home products maker Kao Corp, which rose 2.3 percent to 2,245 yen.

Shares of exporters fell after the market hit a 10-month closing high the previous day, tracking a decline in U.S. stocks which also succumbed to profit-taking.

Honda Motor Co slipped 0.9 percent to 3,190 yen, while electronics components maker TDK Corp slid 2.4 percent to 5,380 yen and chip equipment maker Tokyo Electron Ltd gave up 1.2 percent to 5,150 yen. (Reporting by Elaine Lies; Editing by Edwina Gibbs)

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