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Japan's Topix up 0.2 pct, property strong after BOJ

Published 10/07/2010, 03:06 AM
Updated 10/07/2010, 03:12 AM

* Profit-taking, yen strength weigh; Nikkei inches down

* BOJ plan to buy J-REITs, ETFs positive for stocks -analyst

* Nikkei key chart point seen at 9,704, high hit on Sept. 21

By Aiko Hayashi and Chikafumi Hodo

TOKYO, Oct 7 (Reuters) - Japan's Topix index inched up on Thursday, supported by rises in property and financial shares after the Bank of Japan's monetary easing this week, but gains were capped by profit-taking and persistent strength in the yen.

Shares of banks and brokerages got a shot in the arm after the central bank on Tuesday cut interest rates to virtually zero and pledged to pump more funds into the struggling economy.

The BOJ also said it would set up a 5 trillion yen ($60 billion) fund to buy a wide range of assets including Japanese real estate investment trusts (J-REITs) -- which has bolstered property stocks.

Yet the yen's strengthening to a new 15-year high against the dollar undermined sentiment, limiting active follow-through buying into stocks.

"Market sentiment has been boosted since the BOJ took a big step in dealing with deflation at home. Its plan to purchase Japanese real estate investment trusts and exchange-traded funds is having an impact," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

"But stocks have gained sharply since the announcement and profit-taking is weighing on the market, which is only natural. Exporters were also pressured as expectations for further easing in the United States are causing broad dollar weakness."

The broader Topix ended up 0.2 percent at 846.06, while the benchmark Nikkei inched down 0.1 percent to 9,684.81.

The Topix has gained 2.8 percent and the Nikkei has advanced 3.2 percent since the BOJ's credit easing on Tuesday.

The dollar edged down to 82.87 yen after dipping to a 15-year low of 82.75 yen on Wednesday -- below the 82.87 yen mark where Japan moved to intervene on Sept. 15.

The market's focus has turned to U.S. jobs data to determine the Federal Reserve's next course of action.

"Japanese share prices are expected to stay around current levels until we confirm the outcome of the U.S. jobs data," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

On Wednesday, a private-sector report from payrolls processor ADP, a precursor to Friday's U.S. non-farm payrolls data, suggested the U.S. labour market remained anaemic in September.

PROPERTY, FINANCIAL SHARES STRONG

Mitsubishi Estate rose 2.2 percent to 1,508 yen, adding to gains of more than 4 percent made on Wednesday, and Sumitomo Realty & Development climbed 1.7 percent to 1,873 yen, after jumping about 5 percent the previous day.

Among financials, Nomura Holdings gained 2.3 percent to 445 yen and Mitsubishi UFJ Financial Group rose 1 percent to 405 yen.

The technical trend for the Nikkei looked strong after clearly breaking through key levels, including 9,530, the upper end of the closely watched Ichimoku chart.

No clear resistance is seen until the 200-day moving average of around 10,064, but traders are watching 9,704 -- an intraday high reached on Sept. 21 -- as a key chart point.

A break above 9,807 -- another intraday high hit on July 14 -- would pave the way for a rise towards 10,000, traders said.

But some high-tech stocks lost ground, hurt by the strong yen and disappointing earnings guidance from the world's top memory chipmaker Samsung Electronics Co.

Advantest Corp shed 2 percent to 1,730 yen and Canon Inc fell 1.3 percent to 3,875 yen.

Japanese PC memory maker Elpida Memory dropped 3.9 percent to 892 yen after it said it is looking at buying shares in Taiwanese chipmakers, taking another stab at deepening cross-border ties in its fight against industry leader Samsung.

Some 2.19 billion shares changed hands on the Tokyo exchange's first section, down from a five-month high of 2.88 billion booked on Wednesday.

Advancing stocks outnumbered declining ones, 980 to 520. (Editing by Edwina Gibbs)

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