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Nikkei climbs to 2-week high, profit-taking weighs

Published 06/29/2009, 10:30 PM
Updated 06/29/2009, 10:32 PM
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* Nikkei touches 10,000 but profit-taking emerges

* Nikkei on track for around 23 pct quarterly gain

* Optimism grows ahead of U.S., Japan indicators

* Elpida Memory climbs after govt says to invest

* Resource shares up as crude oil surges

By Elaine Lies TOKYO, June 30 (Reuters) - Japan's Nikkei average rose 1.9 percent on Tuesday and briefly hit 10,000 as surging crude prices boosted resource shares such as Mitsubishi Corp amid growing optimism that economic recession may be easing.

Analysts said the market mood continues to brighten as the first quarter of Japan's financial year comes to an end, but investor skittishness is likely to spark selling to lock in profits on any rises over 10,000 for a while.

Elpida Memory Inc rose 2.4 percent after the Japanese government said it would invest 30 billion yen ($312 million) in the computer chip maker, with other high-tech shares stronger as well.

"It may be overly optimistic, but I think the market mood is changing, that the economic data that both the United States and Japan are waiting for later this week will confirm that their economies have bottomed out," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

The benchmark Nikkei rose as high as 10,000.30, topping 10,000 for the first time in two weeks, but gains were quickly trimmed as nervous investors locked in profits ahead of key indicators due out in the United States and Japan this week.

The Bank of Japan's tankan quarterly survey of business sentiment comes out on Wednesday, and among a slew of U.S. indicators is jobs data due out on Thursday.

The benchmark Nikkei ended the morning up 184.57 points at 9,968.04 while the broader Topix gained 1.6 percent to 929.64.

The Nikkei hit an eight-month intraday high of 10,170.82 earlier in June and is on track for its best quarter since 1995, having risen around 23 percent so far in the April-June quarter. The benchmark closed above its 25-day moving average on Monday, which comes just under 9,800 and offers support, but technical analysts have said the Nikkei needs to break above 10,500-10,600 to move into a sustained uptrend.

Japan's jobless rate rose to a 5-1/2-year high in May but households increased their spending as government stimulus measures took effect.

"Until the first quarter consumption declined sharply but in the second quarter we are now seeing a turnaround," said Masamichi Adachi, a senior economist at JP Morgan.

"Manufacturing activity rebounded and the government stimulus kicked in from the beginning of this fiscal year. The current momentum of the economy is upward."

Some support was also likely from "window dressing", in which fund managers sell some of the market's less profitable shares and buy more profitable ones to bolster their portfolios ahead of the quarter's end.

ELPIDA SUPPORT

Elpida, the world's fourth-biggest DRAM maker, became the first company to get government aid under a new scheme that makes public funds available to businesses hit by the global financial crisis, a move the government said was aimed at helping it boost output capacity and cutting costs.

"This is the first company to receive such funds and shows that the government is determined to support the sector, that they're determined as well not to let Elpida fail," said Hajime Kurabayashi, a strategist at Okasan Securities.

Other semiconductor firms also powered higher, which Kurabayashi said could perhaps could be due to spillover optimism from the Elpida announcement.

Tokyo Electron rose 4.2 percent to 4,730 yen while Advantest Corp, a maker of chip-testing equipment, gained 4.2 percent to 1,761 yen. Nikon, which makes semiconductor products as well as cameras, climbed 6.7 percent to 1,678 yen.

Resource shares climbed as oil powered above $73 per barrel and Shanghai copper rose nearly 1 percent, tracing London gains in the previous session.

Crude oil extended gains after settling at the highest in over two weeks following fresh rebel attacks on oil installations in Nigeria, with gains on Wall Street and Asian share markets offering additional support.

Mitsubishi Corp, Japan's largest trading house, gained 1.9 percent, Mitsui & Co rose 1.6 percent to 1,139 yen, and Itochu Corp rose 2.1 percent to 668 yen.

Oil and gas field developer Inpex rose 4 percent to 764,000 yen.

Trading was light with 885 million shares trading hands on the Tokyo exchange's first section compared to last week's morning average of 1.0 billion.

Advancing shares outnumbered declining shares by 4 to 1. ($1=96.06 Yen) (Additional reporting by Tokyo newsroom; Editing by Michael Watson)

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