Nikkei logs biggest weekly gain in 2 yrs but mood far from upbeat

Fri Dec 2, 2011 7:24am GMT

 * Nikkei up 5.9 pct on week, biggest gain since Dec 2009
 * But faces resistance from 75-day moving average, Ichimoku
ckoud
 * Some see risk of disappointment in Europe next week
 * Investors remain cautious ahead of U.S. jobs numbers
 * DeNA jumps in heavy trade after baseball team purchase
approved
 By Hideyuki Sano	
 TOKYO, Dec 2 (Reuters) - The Nikkei average extended
gains to log its biggest weekly advance in two years on Friday,
though the mood was far from upbeat given uncertainty over
whether Europe will next week manage to cobble together steps to
counter the debt crisis there.	
 After rallying on a move by the world's central banks to
ease funding strains among banks, the Nikkei now faces major
resistance, including from its 75-day moving average, a
sustainable break of which is seen as depending on Europe.	
 "If European leaders can agree on a more active role for the
European Central Bank and possibly aid from the IMF, that would
be positive. But that looks difficult, so there's risk that we
are in for a major disappointment next week," said Norihiro
Fujito, senior strategist at Mitsubishi UFJ Morgan Stanley
Securities.	
 The benchmark Nikkei added 0.5 percent to 8,643.75, 	
for a weekly gain of 5.9 percent, its biggest since the first
week of December 2009. In one positive technical sign, the
Nikkei stayed comfortably above its 25-day moving average, at
8,573.	
 Still there are many more hurdles for the Nikkei, such as
its 75-day moving average at 8,682 and the Ichimoku cloud that
looms above 8,700.	
 "Right now we are in the middle of the market's trading
range from September and October, which means there will be a
lot of selling interest here," said Hiroyuki Fukunaga, CEO of
Investrust.	
 The broader Topix climbed 0.6 percent to 744.14.  	
 Trade volume slowed to 1.57 billion shares, in line with the
monthly average, from Thursday's 2 billion. Advancers
outnumbered decliners by 960 to 555.	
	
 LACK OF BUYERS    	
 Many doubt that the Nikkei can break through its Oct 31 high
above 9,100 in the near future, given the lack of buying from
foreign investors, who have been a major driving force behind
any rallies in Japanese shares in recent years.	
 "The problem is that there are no buyers who are ready to
chase the market higher. Japanese trust banks and individual
investors only buy when the Nikkei is near 8,000. They'll then
sell if it rises to 9,000," said Mitsubishi UFJ's Fujito.	
 European investors, likely hit by home-grown debt problems,
have been consistently selling Japanese shares. Data from the
Tokyo Stock Exchange showed on Thursday that foreign investors
were net sellers of Japanese shares for four straight weeks
until last week.	
 "Markets are looking to the U.S. employment numbers before
moving and the uncertainty in Europe is still keeping many
participants out of the market, so despite slight ups and downs
based on sentiment, we remain stuck at a low level," said
Mitsushige Akino, chief fund manager at Ichiyoshi Investment
Management.	
 Investors also remain cautious ahead of the Dec. 9 Brussels
summit of European leaders, seen as a make-or-break moment for
the currency bloc.	
 European Central Bank President Mario Draghi signalled on
Thursday the bank was ready to act more aggressively to fight
Europe's debt crisis if political leaders agree next week on
much tighter budget controls in the 17-nation euro zone.
 	
 As exporters and banks suffer from worries over Europe, some
investors continued to look to domestic demand-oriented shares.	
 Social gaming company DeNA became the most actively
traded stock by volume, and rose 8.1 percent to 2,519 yen after
it won approval to purchase a professional baseball team.	
 JPMorgan also raised its rating to "overweight" from
"underweight", and Credit Suisse started coverage of the company
at "outperform".	
 Honda Motor underperformed the auto sector,
dropping 0.2 percent to 2,479 yen, after the company's U.S. auto
sales dropped 6 percent in November, having fallen every month
since May. 	
 The firm's U.S. market share tumbled from almost 11 percent
to just over 8 percent in the same period, as Honda lagged
rivals in recovering from supply disruptions caused by the March
earthquake. 	
 Toyota Motor Corp and Nissan Motor Co both
added 1.1 percent. 	
 On the other hand, underlining weak investor appetite for
financial stocks, a planned initial public offering of Japan's
Nikko Asset Management that looked set to raise 45.5 billion yen
($586 million) for its main shareholder was shelved on Friday
due to weak market conditions and a worsening of Europe's debt
crisis.  	
 Shares of banks and securities brokerages have suffered from
worries about a possible global financial crisis originating
from Europe.  	
 So far this year, the TSE's bank subindex has
fallen more than 20 percent, while its brokerage subindex
 has tumbled over 45 percent, compared to a 15.7
percent drop in the Nikkei.	
	
 (Additional reporting by Mari Saito; Editing by Joseph Radford)