Nikkei hits 2-month high, led by exporters as yen slips

Wed Nov 21, 2012 1:02am GMT

* Nikkei up 0.9 pct, Topix rises 0.8 pct
    * Yen hits 7-mth low vs dollar on expectations of LDP
election win
    * Toyota, other exporters lead the charge higher

    By Dominic Lau
    TOKYO, Nov 21 (Reuters) - The Nikkei share average rose to a
two-month high on Wednesday, led by exporters after the yen hit
a seven-month low versus the dollar on expectations the Bank of
Japan will be pushed to take aggressive stimulus action under a
likely new government.
    Shinzo Abe, leader of the main opposition Liberal Democratic
Party (LDP), has called for more extreme steps from the central
bank, including setting a 2 percent inflation target, to pull
the export-reliant economy out of deflation.
    His comments ahead of a Dec. 16 national election have
whipsawed the yen, which hit a seven-month low of 81.86
yen to the dollar on Wednesday. A softer Japanese currency
inflates exporters' overseas earnings when repatriated, and
increases their sales competitiveness.
    Exporter shares that benefited from the weaker yen included
Toyota Motor Corp, Canon Inc, Honda Motor Co
 and Nissan Motor Co, which gained between 1.7
and 2.3 percent.
    The Nikkei climbed 0.9 percent to 9,227.08 by
midmorning, after slipping 0.1 percent on Tuesday to snap a
four-session winning run.
    "What is driving the yen weaker is politics. Specifically,
the LDP release their manifesto ... and reiterate their
pro-stance for monetary easing, their strong hand they will take
with the BOJ," a senior dealer at a foreign brokerage said.
"Every stock that is up today is a yen-sensitive stock."
    "Nobody cares about last month's trade data ... There is
going to be policy in place to drive the yen weaker, which your
trade data is going to improve. There is no point in backward
looking," the dealer said.
    Japan's exports slid 6.5 percent in October from a year
earlier to mark the fifth straight month of declines, government
data showed on Wednesday, weighed down by weakening global
demand and a territorial dispute with China. 
    Toyota was the second-most traded stock on the main board by
turnover after Softbank Corp, which rose 2 percent to
2,974 yen after J.P. Morgan raised its price target on the
mobile operator by 8.6 percent to 3,800 yen, another trader
said.
    Canon and Honda were the fifth- and sixth-most traded,
respectively.
    The broader Topix advanced 0.8 percent to 768.26.
    The benchmark Nikkei is up 9.1 percent this year, boosted by
a 5.7 percent rally from Nov. 14 to 19. Still, the Japanese
index lags a 10.4 percent rise in the U.S. S&P 500 and a
10.2 percent gain in the pan-European STOXX Europe 600.
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