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Nikkei rises 0.8 pct, eyes on currency market

Published 09/16/2010, 09:31 PM
Updated 09/16/2010, 09:36 PM

* Weakness in yen helps; focus on further yen intervention

* Nikkei faces resistance at the top of Ichimoku cloud

* Exporters rise; GS Yuasa jumps after European deal report

By Aiko Hayashi

TOKYO, Sept 17 (Reuters) - Japan's Nikkei average rose 0.8 percent on Friday, helped by weakness in the yen after Japan's massive yen-selling this week, but gains were kept in check as investors watched if there would be further currency intervention.

Investors appeared also reluctant to actively take positions ahead of a three-day weekend at home, market players said, while technical resistance looms for the Nikkei at the top of its Ichimoku cloud. Ichimoku charts are popular with Japanese traders.

"The yen has been moving on the weak side, but investor confidence still isn't bullish enough to push the Nikkei further above 9,500," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

"In addition to the fact that investors aren't still entirely sure about the outlook for the global economy, they are also closely watching whether there would be any comments from the United States on Japan's currency intervention."

Japan sold an estimated 1.8 trillion yen ($21.1 billion) for dollars on Wednesday, a record for a single day, with Prime Minister Naoto Kan pointing to more potential yen selling, but the country has faced some international criticism for its intervention.

Since most advanced economies are grappling with slow growth at home, Japan's move has heightened concerns countries would 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 gained 73.29 points to 9,582.79. It ended the previous day flat after touching a five-week intraday high of 9,620.90. The broader Topix added 0.7 percent to 850.58.

Among encouraging technical signs, the Nikkei has pierced the bottom of its Ichimoku cloud this week and probed higher toward the top of the cloud, while its 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 had waited to square large long positions built at that level.

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

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

In early Asia trade, the dollar traded at 85.80 yen, well above the low of 82.87 hit on electronic trading platform EBS on Wednesday.

Shares of exporters gained, with Kyocera Corp rising 0.7 percent to 8,170 yen and Honda Motor Co adding 1 percent to 2,989 yen.

GS Yuasa Corp jumped 4 percent to 623 yen after a media report said the battery maker will team up with American car parts maker Magna International Inc and trading house Mitsubishi Corp to produce lithium ion batteries for electric vehicles in Europe. (Editing by Edwina Gibbs)

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