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Nikkei climbs on U.S. economy optimism after Fed

Published 09/23/2009, 10:36 PM
Updated 09/23/2009, 10:39 PM
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* Nikkei jumps on optimism for U.S. economy, short-covering

* JAL dives after news of potential split, public fund report

* Consumer lender Aiful plunges as warns of loss

* Tokyo market reopens after five-day weekend

By Elaine Lies

TOKYO, Sept 24 (Reuters) - Japan's Nikkei stock average jumped 1.7 percent on Thursday, with exporters such as Honda Motor Co rising after Federal Reserve statements that U.S. economic activity was picking up outweighed fears about a stimulus withdrawal by the Fed.

Active short-covering after the benchmark lost 0.7 percent last week also boosted shares across the board, analysts said.

But Japan Airlines tumbled 11.1 percent after sources said the company might be broken up and public broadcaster NHK reported it is planning to seek a taxpayer-funded bailout to overhaul its operations.

Consumer lender Aiful plunged 11.2 percent after it said on Thursday it would halve its workforce and slash branch numbers as it warned of a $3.4 billion loss for the year to March 2010.

Though U.S. shares had originally risen sharply on Fed comments that economic activity was picking up, they reversed course in the last hour of trade on worries about the timing of the removal of some of the Fed's stimulus.

But analysts said Tokyo was taking the more optimistic stance.

"More than worries about the removal of any stimulus, I think the market is really starting to get a sense that things are improving -- this is why certain manufacturers that had fallen behind a bit are strong today," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"Basically, though, the Fed's comments do seem to be pointing the way to the exit."

The Fed's policy-setters met and kept interest rates unchanged, as expected, but they also said the U.S. central bank would slow purchases of mortgage debt to extend the programme's life until the end of March -- a move seen as a step towards a measured withdrawal of its extraordinary support for the economy during the downturn.

Yamagishi noted that while purchases of mortgage debt might be slowing, they would still continue until March.

Other market players agreed the Fed statement was being taken more positively than otherwise, with Wall Street's Wednesday fall likely being little more than profit-taking.

"Wall Street had already factored in a lot of good economic indicators over the past month, that's why the positive comments didn't help," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"What we saw yesterday was really just profit-taking."

The benchmark Nikkei rose 177.88 points to 10,548.42, while the broader Topix rose 1.4 percent to 952.37.

With the Nikkei beginning trade on Thursday above a short-term downtrend line, the technical picture is also becoming somewhat brighter, Osakabe added.

The benchmark also broke well above its 25-day moving average, which currently comes in around 10,400.

JAL, AIFUL TUMBLE

JAL fell to 152 yen. Earlier this week, two sources familiar with the matter said lenders to JAL may seek to split the carrier between its profitable and loss-making parts.

Aiful, which last week asked creditors to let it to push back repayments on $3 billion in debt, said it plans to cut about 2,000 jobs, or about 49 percent of the group's total workforce, by February.

It tumbled to 119 yen.

But exporters fared better, rising on optimism about the U.S. economic recovery.

Honda advanced 1.9 percent to 2,885 yen, while Kyocera Corp climbed 3.3 percent to 8,350 yen and Tokyo Electron Ltd jumped 4.8 percent to 5,850 yen.

Sony Corp gained 3.3 percent to 2,675 yen. A Sony executive said on Wednesday that sales of the PlayStation 3 video game console jumped in the weeks after a $100 price cut last month, and strong demand could lead to empty shelves at retailers.

Daiichi Sankyo climbed 1.7 percent to 1,912 yen after its top executives on Wednesday predicted the company's Benicar blood-pressure drugs would post modest sales gains even after Merck & Co's rival Cozaar and Novartis AG's market-leading Diovan begin facing generic competition.

Trade was moderate on the Tokyo exchange's first section, with 1.1 billion shares changing hands, compared with last week's morning average of 909 million.

Advancing stocks beat declining ones by nearly 4 to 1. (Reporting by Elaine Lies; Editing by Chris Gallagher)

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