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Nikkei gains 0.5 pct as yen on back foot

Published 09/15/2010, 09:50 PM
Updated 09/15/2010, 09:52 PM

* Nikkei extends gains, touches 5-week high

* Focus on how long the yen can be kept on defensive

* Exporters up again, top performers on Tokyo bourse

By Shinichi Saoshiro

TOKYO, Sept 16 (Reuters) - Japan's Nikkei average gained 0.5 percent on Thursday after touching a five-week high, as the yen remained on the defensive after Japan intervened in the market the previous day to weaken the currency.

The yen's tumble off a 15-year high against the dollar due to Japan's first intervention in six years has boosted exporters such as automakers, which were among the top performers on the Tokyo bourse.

But concerns about how effective Japanese authorities would be in keeping the yen in check prevented the Nikkei from gaining further momentum.

"The market sees a rise above 86 yen (against the dollar) as likely but considers an advance to 90 yen difficult," said Yumi Nishimura, a deputy general manager at Daiwa Securities Capital Markets.

Japan may find it difficult to keep the yen weak as it has been put in the position of intervening alone, while low U.S. government bond yields may also hamper its efforts, as they make the yen more attractive against the greenback.

Repatriation flows by investors and manufacturers sending overseas earnings back to Japan this month could also nudge the yen higher agains the dollar, said Nishimura at Daiwa Securities Capital Markets.

The dollar traded at 85.52 yen. It fell to a 15-year low below 83 yen on Wednesday just before Tokyo stepped into the currency market.

The benchmark Nikkei rose 43.47 points to 9,560.03 after touching a five-week intraday high of 9,620.90. The broader Topix was little changed at 848.84.

Market players were keen to see if the Nikkei could consolidate its footing above the 75-day moving average, currently around 9,456.

The benchmark moved above its 75-day moving average for the first time in four months the previous day, which is seen as a bullish signal.

Shares of exporters extended gains, with Sony Corp rising 0.5 percent to 2,608 yen and Canon Inc adding 0.1 percent to 3,840 yen. Among automakers, Toyota Motor Co climbed 1.8 percent to 3,065 yen. (Editing by Edwina Gibbs)

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