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Nikkei gains 2 pct on bank optimism, earnings awaited

Published 07/14/2009, 01:38 AM
Updated 07/14/2009, 01:48 AM
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* Nikkei on track to snap nine-day slide

* Exporters benefit from Wall St rally, yen

* Nissan, carmakers up on China business expansion plans

* U.S. financials' earnings due this week in focus

By Shinichi Saoshiro

TOKYO, July 14 (Reuters) - Japan's Nikkei average gained 2 percent on Tuesday after a nine-day slide, with banks buoyed by upbeat analyst comments regarding the U.S. financial sector and exporters lifted by a halt in the yen's sharp appreciation.

Nissan Motor Co surged more than 7 percent on its plans to boost production capacity in China, while Komatsu Ltd jumped more than 6 percent after the Nikkei business daily said the company returned to profitability in the April-June quarter.

In comments to CNBC television, influential analyst Meredith Whitney said major U.S. financials could do well in the second quarter, boosting sentiment ahead of closely-watched bank earnings this week and lifting Wall Street on Monday.

Whitney also upgraded Goldman Sachs to "buy" on Monday, driving its stock higher.

"After a recent bearish run, the market has been looking for an opportunity to rebound, and the analyst comments on the financial sector fit the bill," said Yutaka Miura, senior technical analyst at Mizuho Securities.

Goldman will release earnings results later on Tuesday, followed by Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc later in the week.

The benchmark Nikkei advanced 181.56 points to 9,231.89. It slid 2.6 percent the previous day to hit its lowest finish since May 18 and for its ninth day of decline. It lost 9.1 percent over that nine-day period.

The broader Topix rose 1.6 percent to 866.41.

"Wariness toward Goldman's earnings may have eased somewhat, but caution still remains ahead of the week's other earnings releases which include high tech firms as well as financials," said Yumi Nishimura, a deputy general manager at Daiwa Securities SMBC.

"The Nikkei has stopped short of falling below 9,000 but a wait-and-see mood is likely to prevail until most of the key earnings are gauged first."

NISSAN, AUTOMAKERS STRONG

Banks such as Sumitomo Mitsui Financial Group and Mizuho Financial Group gained after their U.S. peers gained the previous day.

SMFG climbed 5.4 percent to 3,700 yen and Mizuho rose 3.1 percent to 199 yen. Mitsubishi UFJ Financial Group, Japan's largest bank, advanced 3.2 percent to 550 yen.

Automakers rose on news that Nissan Motor Co and Honda Motor are raising production capacity in China as brisk local demand helps prop up their earnings at a time when sales virtually everywhere else are in a steep slump.

Nissan gained 7.5 percent to 546 yen, while Honda rose 2.3 percent to 2,425 yen. Toyota Motor Corp added 3.6 percent to 3,500 yen.

Other exporters also gained. Sony Corp jumped 5.8 percent to 2,290 yen and Canon Inc climbed 3.4 percent to 3,020 yen.

But shares of companies that are seen as resilient in the face of economic downturns fell out of favour as exporter shares climbed to buoy the overall market.

Drugmakers Eisai Co slipped 1.8 percent to 3,240 yen and Chugai Pharmaceutical Co shed 2.4 percent to 1,773 yen.

Shares of Komatsu shot up 6.5 percent to 1,379 yen. It will likely report an operating profit to 5 billion yen ($54 million) for the April-June quarter, compared to a 48.2 billion yen operating loss in the January-March quarter although that is still a 94 percent fall from a year earlier, the Nikkei said.

The dollar climbed 0.3 percent to 93.18 yen after hitting a five-month low of 91.73 yen.

(Additional reporting by Aiko Hayashi; Editing by Joseph Radford)

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