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Nikkei eases after hitting 2-wk high, but helped by yen, oil

Published 03/31/2011, 11:34 PM
Updated 03/31/2011, 11:40 PM
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* Nikkei meets resistance near 200-day MA after 2-week high

* Weaker yen, higher commodities prices help Nikkei

* Market awaits U.S. payrolls data

By Chikafumi Hodo and Antoni Slodkowski

TOKYO, April 1 (Reuters) - Japan's Nikkei average fell slightly on Friday, running out of steam after advancing to a two-week high, with investors keen to lighten recently built positions ahead of the weekend and before the release of U.S. payrolls data later in the day.

But Japanese shares were supported by a weaker yen and gains in energy-related shares, such as Japan's biggest oil and gas developer Inpex Corp , due to strong rallies in commodities prices the previous day.

The benchmark Nikkei climbed as high as 9,805.93 -- its highest since March 14 -- on follow-through buying spurred by a weaker yen, after posting solid gains over the last two sessions.

But the market ran out of steam as it approached closely watched technical resistance at the 200-day moving average around 9,820.

Investors were also cautious about holding onto big long positions over the weekend as uncertainty lingered over the aftermath of the March 11 earthquake and tsunami and what looks likely to be a prolonged nuclear crisis.

"The Nikkei has been pretty volatile recently. But now the market's focus is on U.S. jobs data tonight before deciding what to do next," said Shoji Yoshigoe, deputy general manager at Mitsubishi UFJ Morgan Stanley Securities.

"The Nikkei is supported by shares related to commodities and resources," Yoshigoe said.

The Nikkei closed the morning session down 0.1 percent or 10.76 points at 9,744.34.

The broader Topix was down 0.2 percent or 1.77 points at 867.61.

The Nikkei had advanced strongly over the past two sessions as market participants tried to lift the value of share prices for domestic financial year-end book closings the previous day.

The market lacked energy as there were fewer participants trying to push up prices on Friday.

Still, Japanese stocks drew support after the yen slipped to a fresh three-week low against the dollar. The Japanese currency traded at 83.65 yen to the dollar on Friday morning.

"Considering that today is the start of the new financial year we saw some solid buying at the beginning, but the market turned careful about extending purchases," said Kazuhiro Takahashi, general manager at Daiwa Securities.

"Recent bullishness in U.S. stocks is encouraging, but at the same time a strong economic recovery in the United States would mean it may have to consider ending its current monetary policy, which will be negative for shares."

OIL RELATED SHARES, TEPCO

Shares in Japan's biggest oil and gas developer, Inpex Corp , and other oil-related companies extended solid gains made after the earthquake, as the price of oil hit a 2-1/2-year high on Thursday on ongoing supply threats due to turmoil in Libya and the Middle East.

Inpex jumped 4.3 percent to 658,000 yen in heavy trade. It has surged nearly 20 percent since the quake, while the benchmark Nikkei has lost more than 7 percent in the same period, as the disaster spurred demand for oil and gas products amid a shortage of energy supplies.

The Reuters-Jefferies CRB index , a measure of 19 mostly U.S. commodity futures, finished the first quarter with a strong 8.0 percent gain as global economic improvement began to take hold.

The CRB's rally on Thursday, up 1.6 percent on the day, was sparked by strong gains in oil and energy futures, cotton, silver, copper and grains. Earlier in March the index reached its highest level since September 2008. [ID:nN31561963]

Shares of Tokyo Electric Power Co (TEPCO) plunged 9.7 percent to 421 yen after climbing shortly after the opening.

The Mainichi newspaper, quoting an unnamed government official, said on Friday the Japanese government was planning to inject funds into the utility but was unlikely to take more than a 50 percent stake in it.[ID:nL3E7EV46V]

Traders said TEPCO shares are mainly driven by short-term speculators, trying to take advantage of massive volatility in the shares since the earthquake.

"TEPCO is not a normal share anymore. The fate of TEPCO on whether it will be nationalised or not is important," said a trader at a Japanese brokerage house.

"But more than fundamental factors, speculators are simply flocking into TEPCO shares and trading them aggressively, taking advantage of extremely heavy volatility," he said. (Additional reporting by Hideyuki Sano; Editing by Michael Watson) Reuters Terminal users can see other related news and rates by double-clicking on: All Nikkei indices <0#.NIKKEI> All shares listed on The benchmark Nikkei ended the day up 1.1 percent or 101.12 points at 9,536.13, Nikkei-225 <0#.N225> N225 index TOPIX index Nikkei Japan 1000 TOPIX sector data Nikkei 300 index TOPIX futures data <0#JTI:> Osaka N225 data <0#JNI:> Chicago N225 data <0#NK:> Top 30 by volume Top 30 by value Total volume Total value 1st section sector RICs All TSE weighted avg Top 30 gainers by pct Top 30 losers by pct Top 30 net gainers Top 30 net losers

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