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Nikkei up after G20, gains limited before earnings

Published 10/24/2010, 08:59 PM
Updated 10/24/2010, 09:04 PM

* Earnings in full swing this week; Canon, Sony to report

* G20 vows to refrain from competitive devaluations

* Further rapid advance in yen may be avoided -analysts

By Aiko Hayashi

TOKYO, Oct 25 (Reuters) - Japan's Nikkei average inched up on Monday after the weekend meeting of the Group of 20 major economies agreed to shun competitive currency devaluations, spurring expectations that any further advance in the yen will be limited.

The G20 meeting in South Korea resulted in no major policy initiatives, but finance ministers struck a surprise deal to give emerging nations a bigger voice in the International Monetary Fund, recognising the quickening shift in economic power away from rich Western nations.

Although market analysts expected the market to be firm, they said gains were likely limited ahead of the peak of Japan's earnings season, with a flurry of major companies set to report this week including Canon Inc on Wednesday and Sony Corp on Friday.

"With the G20 meeting over, investors closely watched the reaction in the currency markets and it doesn't look likely that the yen will keep climbing at this point," said Hajime Nakajima, deputy general manager at Cosmo Securities.

"But the market here will likely be range-bound until earnings reports by blue-chip exporters this week are out of the way. Many in the market appear to think their full-year guidance figures won't be very good."

One market focus is companies' currency assumptions for the year for clues to earnings prospects, analysts said.

Toyota Motor Corp will lower its dollar/yen rate assumption by 10 yen to 80 yen for the October-March second half of the business year, which will cut its operating profit for the period by 150 billion yen ($1.84 billion), the Yomiuri newspaper said on Monday.

The benchmark Nikkei was up 0.2 percent at 9,443.73, while the broader Topix was almost unchanged at 824.97.

In early Asian trade the dollar was slightly lower against the yen at 81.20 yen.

The Nikkei rose 0.5 percent on Friday, though it shed 0.8 percent on the week, weighed down by a fall of nearly 2 percent on Wednesday after China unexpectedly tightened credit.

The Nikkei's support likely stands at its 13-week moving average, now 9,375, which has served as support since September.

Resistance looms at its 26-week moving average, now 9,568, which has held down the Nikkei for about five months.

Shares of KDDI Corp surged 8 percent to 439,000 yen after the mobile phone operator said it would buy back up to 100 billion yen of its own shares in what could be the second-biggest share repurchase in Japan this year.

KDDI decided to launch the buyback because its stock was depressed and it had no plans for major acquisitions or any other big investments, Tadashi Onodera, who will step down as president in December, told a news conference in Tokyo.

But exporter shares were generally soft, with Canon down 0.1 percent at 3,780 yen and Sony falling 0.8 percent to 2,712 yen. Toyota inched down 0.7 percent to 2,907 yen. (Editing by Michael Watson)

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