Nikkei climbs to 1-week high as softer yen boosts exporters

Thu Nov 15, 2012 2:48am GMT

* Nikkei up 1 pct, Topix rises 1.1 pct
    * Sony tumbles after saying to issue convertible bonds
    * Banks in demand after H1 results

    By Dominic Lau
    TOKYO, Nov 15 (Reuters) - Japan's Nikkei average rose to a
one-week high on Thursday, supported by gains for exporters as
hopes that a new government could lead to easier monetary policy
weakened the yen, but Sony Corp tumbled on a fundraising plan.
    By the midday break, the Nikkei advanced 1 percent
to 8,748.29 Points, breaking above its five-day moving average
at 8,701.62, as investors shrugged off concerns about the
prospect of protracted negotiations to resolve fiscal gridlock
in the United States.
    Sony slumped 10.6 percent after the consumer
electronics maker said it will raise $1.9 billion through a sale
of convertible bonds, a third of which will be used for
investment in scandal-hit Olympus Corp. It was the most
traded stock on the main board by turnover.
    But other exporters bounced as the yen traded at 80.19 to
the dollar, not far from a one-week low of 80.31 yen touched on
Wednesday after Prime Minister Yoshihiko Noda unveiled plans to
dissolve parliament's lower house on Friday for a snap election
on Dec. 16.
    The main opposition Liberal Democratic Party (LDP) is
expected to win the poll.
    Among the exporters, Toyota Motor Corp, Honda Motor
Co, Canon Inc and industrial robot maker Fanuc
Corp climbed between 1.8 and 3.1 percent.
    "Everyone is expecting Shinzo Abe from the LDP to be the
next prime minister. He will pressure the BOJ to conduct bold
monetary easing by setting a 2 to 3 percent inflation target,"
said Shun Maruyama, chief Japan equity strategist at BNP
Paribas.
    "In the near-term, we can be bullish on the Nikkei and
bearish on the Japanese yen."
    Comments by U.S. President Barack Obama that he won't sign
off on more tax cuts for the wealthy, and unyielding remarks
from Republican leaders earlier this week, signal a long period
of negotiation and brinkmanship that could leave a cloud of
uncertainty over the economy.
    Worries over the so called "fiscal cliff" in the United
States have been weighing on global equities, including Japanese
stocks, with the Nikkei falling for seven sessions in a row from
Nov. 5 to 13.
    The benchmark had lost 4.3 percent during the losing streak,
its longest such run in seven months. But it is still up 3.5
percent so far this year.
    The broader Topix rose 1.1 percent to 730.58 in
active trade in Thursday's morning session, with volume at 65
percent of its full daily average for the past 90 days.
    
    NEAR-TERM POSITIVE
    "If the new cabinet took a more proactive line on monetary
policy, the appointment of the new (BOJ) governor and deputy
governors could reflect that orientation," Nomura strategists
wrote in a note.
    "We might also see expectations for an improvement in the
chilly relationship with China and for government spending. We
think such expectations would produce a positive response on the
equity markets, at least in the near term."
    But a trader said he doubted an LDP government would have
any long-term positive impact on the Nikkei as the party was in
power for a long time before Noda's Democratic Party of Japan
kicked it out of office in 2009, and it had not been able to
pull the country out of deflation during its tenure.
    For now, though, investors were upbeat.
    Japan's megabanks were in demand after they reported their
first-half results after the market close on Wednesday.
    Mitsubishi UFJ Financial Group, Sumitomo Mitsui
Financial Group and Mizuho Financial Group 
were up between 2.5 and 3.2 percent.
    BNP Paribas's Maruyama said it was "a bit risky" to chase
exporters given the fiscal issue in the United States and the
euro zone debt crisis. 
    Banks and real estate companies were the best bet to play
the rally in Japanese equities in the short-term, he added.
    The real estate sector climbed 2.4 percent, with
Sumitomo Realty & Development Co Ltd up 3.5 percent and
Mitsui Fudosan Co Ltd adding 2.6 percent.
    Social gaming company Gree Inc shed 2.3 percent,
however, after it disappointed the market with poor results for
the first quarter ended September.
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