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Nikkei hits 3-week closing high, exporters gain

Published 10/15/2009, 02:35 AM
Updated 10/15/2009, 02:39 AM
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* Nikkei breaks resistance near 10,140, at 3-wk closing high

* Exporters, techs strong after Dow breaks above 10,000

* Elpida climbs after posting first profit in 8 quarters

* Banks pare gains made in wake of JPMorgan results

By Elaine Lies

TOKYO, Oct 15 (Reuters) - Japan's Nikkei stock average rose 1.8 percent to a three-week closing high on Thursday, led by exporters and tech shares after robust U.S. company results and retail sales data boosted optimism about an economic recovery.

But the market came off earlier intraday highs in afternoon trade as the impact of the much better-than-expected results from JPMorgan Chase & Co and of economic data, which boosted the Dow above 10,000 for the first time in a year, wore thin ahead of more U.S. bank results on Thursday and Friday.

Panasonic Corp rose 3 percent after Credit Suisse hiked its rating on the firm to "outperform" from "neutral", saying that it felt the share price was undershooting on concerns of financing risks, with earnings solid and the stock looking attractively priced.

Despite paring gains that took the Nikkei up as much as 2.1 percent by midday, the benchmark gained 178.44 points to 10,238.65 -- its highest close since Sept 25.

"There was some substantial selling of Nikkei futures around 10,300, and this has weighed on the cash market as well," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management. "This morning's energy may also have simply been the Nikkei playing catch-up to the gains made by other Asian markets yesterday." The broader Topix rose 1.1 percent to 904.11.

Some in the market said investors remained less than enthusiastic about Japanese shares, despite U.S. retail sales data rising for the second month and offering cautious optimism that spending would support the global economy.

"Given the gains in the Dow and the general mood of global stock markets, it wouldn't be that surprising to see the Nikkei rise as far as 11,000," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "But Japan still lags overseas markets, and we're not seeing the same fund inflows that they are." Investor optimism about U.S. earnings, already strong after good results from Intel Corp this week, was further bolstered when JPMorgan's quarterly profit rose sharply.

The Dow Jones Industrial average rose above 10,000 for the first time in a year, to 10,015.86 for a gain of 1.5 percent. Other U.S. indexes all rose more than 1 percent.

But JPMorgan's $3.6 percent quarterly profit could prove a tough act to follow for rivals, with only former investment bank Goldman Sachs Group Inc, which is set to report on Thursday, expected to better JPMorgan..

Some Tokyo market players said investors were drawing back by the afternoon to wait for upcoming results, which include Citigroup Inc on Thursday and Bank of America Corp on Friday. But others said the impact of the results was unlikely to be significant unless numbers were much worse than forecast.

BANKS, EXPORTERS

Japanese banks, one of the drivers of morning advances, erased gains by the close as a flurry of short-covering prompted by the JPMorgan news wore off.

Top lender Mitsubishi UFJ Financial Group ended flat, while No. 2 bank Mizuho Financial Group lost 1.7 percent to 174 yen and No. 3 bank Sumitomo Mitsui Financial Group fell 0.6 percent to 3,250 yen.

Some players noted that the prospect of a loan moratorium proposed by Banking Minister Shizuka Kamei still hung over the market and that without a real recovery in banking shares gains by the Nikkei would be limited.

But exporters climbed, with Sony Corp up 3.6 percent to 2,600 yen, Honda Motor Co gaining 1.8 percent to 2,810 yen and Toyota Motor Corp rising 1.4 percent to 3,620 yen.

Elpida Memory rose 2.9 percent to 1,260 yen after saying that it had posted an operating profit of 500 million yen in the three months to the end of September against a loss of 24.5 billion yen a year earlier.

"This Elpida news may be taken as a sign that the whole sector is likely to see earnings recovery, with autos also likely to do pretty well," said Hideyuki Ishiguro, a supervisor at Okasan Securities.

Steelmakers gained after the Nikkei business daily reported that China aims to curb lending to the steel and cement sectors as well as four other sectors that have excess production capacity. Nippon Steel Corp, the world's second-biggest steelmaker, rose 3.1 percent to 365 yen, while sixth-ranked JFE Holdings Inc climbed 2.1 percent to 3,370 yen.

Trade was moderate, with 2 billion shares changing hands on the Tokyo exchange's first section, slightly under last week's daily average. Advancing shares outpaced declining ones by more than 2 to 1. (Reporting by Elaine Lies; Editing by Joseph Radford)

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