Nikkei rises 1.4 pct in thin trade, exporters gain on weaker yen

Tue Dec 25, 2012 6:52am GMT

* Nikkei up 1.4 pct, Topix up 0.6 pct
    * More global funds add Japan shares - analyst

    By Ayai Tomisawa
    TOKYO, Dec 25 (Reuters) - Japan's Nikkei share average rose
1.4 percent on Tuesday as exporters gained on a weaker yen, but
volume was thin due to a lack of participants during the
Christmas holiday.
    The Nikkei gained 140.06 points at 10,080.12,
nearing a nine-month intraday high of 10,175.16 hit on Friday.
    The market may stay upbeat until the year end as the yen
stays weak, raising hopes that exporters will report
better-than-expected earnings for the coming year, analysts
said.
    Exporters led the gains, with Honda Motor Co adding
1.0 percent, Fanuc Ltd rising 2.2 percent and Canon Inc
 rising 2.1 percent.
    "Most investors have covered their short positions on
Japanese stocks, but there are some global funds which are still
adding Japanese stocks because they think there is a risk of not
having Japanese stocks for the coming months," said Kenichi
Hirano, a strategist at Tachibana Securities.
    The dollar last traded at 84.83 yen, having risen as
high as 84.965 yen on Tuesday morning, its highest level since
April 2011. A weak yen boosts exporters' overseas earnings when
repatriated.
    Shinzo Abe, who is set to become prime minister on
Wednesday, renewed pressure on the Bank of Japan to adopt a
higher inflation target. Abe said he would try to revise a law
guaranteeing the BOJ's independence if his demand for a binding
2 percent inflation target - double its current goal - is not
met. 
    After rising 16.4 percent over the last six weeks, hitting a
nine-month high last Friday, the Nikkei is in "overbought"
territory, with its 14-day relative strength index at 72.66,
above 70 which is deemed the overbought threshold and signalling
that a correction may be imminent.
    Also on Tuesday, Mitsubishi Chemical Holdings Corp 
added 1.7 percent after rising as much as 6.0 percent on news
that the firm will buy Qualicaps Co Ltd, a drug capsule maker,
from U.S.-based Carlyle Group. 
    Mitsubishi Electric Corp dropped 4.0 percent after
it pledged on Friday to pay a total 77.3 billion yen ($912
million) to several Japanese government agencies for overbilling
for equipment and services over several decades and slashed its
annual profit forecast by a quarter. 
    The broader Topix rose 0.6 percent to 838.01 in thin
trading, with 2.23 billion shares changing hands. That compares
with last week's average daily trading volume of 3.53 billion
shares.