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Nikkei hits 6-week closing high, buoyed by yen

Published 09/17/2010, 03:06 AM
Updated 09/17/2010, 03:08 AM

* Nikkei up 4.2% on week, best weekly performance this year

* Nikkei faces resistance at the top of Ichimoku cloud

* Focus on chances of further yen intervention

* Exporters rise; GS Yuasa jumps after European deal report

* Eyes on FOMC, U.S.-Japan meeting next week

By Aiko Hayashi

TOKYO, Sept 17 (Reuters) - Japan's Nikkei average rose 1.2 percent to a six-week closing high on Friday, helped by a weaker yen after Japan's massive yen-selling this week, leading the benchmark to book its best weekly performance this year.

Japan's first currency intervention in six years on Wednesday knocked the yen from a 15-year high versus the dollar and boosted the Nikkei by more than 2 percent, though analysts have said the yen's six-month uptrend does not look broken.

Even so, the Nikkei posted a weekly rise of 4.2 percent, its best week since early December 2009, with shares of high-tech exporters and automakers among the top gainers in Japanese stocks this week.

On the technical front, the Nikkei also pierced the bottom of its Ichimoku cloud this week and probed higher towards the top of the cloud, though resistance lurks there.

"A solid performance by exporters' shares continued as the yen largely kept its weakness against the dollar," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

"Given Japan's attitude toward intervention this time, such as its large size, counter moves may be unlikely. Eyes are now on the Federal Reserve's meeting next week, at a time when U.S. yields are on the rise."

Japan sold an estimated 1.8 trillion yen ($21 billion) for dollars on Wednesday, a record for a single day, with Prime Minister Naoto Kan pointing to more potential yen selling, but Tokyo has faced international criticism for its intervention.

Since most advanced economies are grappling with slow growth at home, Japan's move has heightened concerns that countries could launch a round of competitive devaluations to support their own exports.

Japan's yen-selling intervention will likely be on the agenda when Prime Minister Naoto Kan meets U.S. President Barack Obama next week in New York, the Asahi newspaper reported on Friday.

On Friday, the benchmark Nikkei rose 116.59 points to 9,626.09, its highest finish since Aug. 6. The broader Topix added 0.9 percent to 852.09.

Japanese markets will be closed on Monday for a national holiday.

In other upbeat technical signs, the Nikkei's 25-day moving average, which is considered a proxy for a one-month moving average and is closely watched in Japan, has turned upward.

But market players said the Nikkei faced stiff selling pressure above 9,600 from investors who have waited to square large long positions built at that level.

Technical resistance is also seen around 9,660, the top of the Ichimoku cloud. Ichimoku charts are popular with Japanese traders.

The dollar traded at 85.70 yen by late afternoon in Tokyo, compared with its low of 82.87 hit on electronic trading platform EBS on Wednesday.

Market players will be watching a series of events next week, including the Federal Reserve's policy-setting meeting on Tuesday and an expected meeting between Kan and Obama.

U.S. treasuries have been hurt by fading hopes the Fed will renew quantitative easing in the form of massive debt purchases aimed at jump-starting the economy, after data this week appeared to reduce the chances of a double-dip recession.

EXPORTERS UP, GS YUASA JUMPS

Shares of exporters gained, with Kyocera Corp rising 1.1 percent to 8,200 yen and Honda Motor Co adding 1.9 percent to 3,015 yen.

GS Yuasa Corp charged up 3.3 percent to 619 yen after a source close to the discussions said the battery maker is in talks with Magna International Inc, the world's No.3 car parts maker, to produce lithium ion batteries for electric vehicles in Europe.

Hitachi gained 3.6 percent to 378 yen after Japan's biggest electronics conglomerate said it plans to pay a 5 yen per share dividend for the April-September first half. It paid no dividend in the same period last year, when it was mired in losses.

Trade slowed on the Tokyo exchange's first section, with 1.67 billion shares changing hands, down from Wednesday's eight-week high of 2.36 billion.

Advancing stocks outnumbered declining ones by nearly 4 to 1. (Editing by Michael Watson)

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