Nikkei gains as yen weakens, lifting exporters

Wed Dec 26, 2012 1:42am GMT

* Nikkei up 0.5 pct, Topix up 0.7 pct
    * Weak yen pushes up exporters
    * Reflationary stocks also gain on new government hope

    By Ayai Tomisawa
    TOKYO, Dec 26 (Reuters) - Japan's Nikkei share average edged
higher on Wednesday as the yen slipped to a 20-month low, on
expectations of an aggressive monetary easing stance by the new
government, lifting exporters on hopes of better-than-expected
earnings.
    The dollar last traded at 85.35 yen, the dollar's highest
level since April 2011 on expectations that incoming Japanese
Prime Minister Shinzo Abe would push the central bank into more
forceful monetary easing. Abe is set to be selected as prime
minister by lawmakers on Wednesday after leading his Liberal
Democratic Party to a landslide victory in a lower house
election this month.
    The Nikkei gained 0.5 percent to 10,132.55. 
    Market players said despite signs that Japanese stocks were
overbought, buying had continued, but due to the Christmas
holiday doldrums, volume was likely to stay thin.
    "Most foreign funds have added Japanese shares and there are
fewer participants today, but there still is a reason for the
Nikkei to rise," said Hideyuki Okoshi, general manager at
Chibagin Securities. "Not only exporters but investors are
buying other stocks which could benefit under the new
government."
    Exporters were in demand, with Toyota Motor Corp 
adding 1.6 percent, Honda Motor Co gaining 1.3 percent
and Sony Corp rising 2.5 percent. A weak yen boosts
exporters' overseas earnings when repatriated.
    Real estate shares and financials were also lifting the
market on Abe's reflationary policy, with Mitsui Fudosan Co
 rising 0.8 percent, Mitsubishi UFJ Financial Group
 adding 1.1 percent and Sumitomo Mitsui Financial Group
 advancing 0.7 percent.
    After rising 17 percent over the last six weeks, the Nikkei
is in "overbought" territory, with its 14-day relative strength
index at 73.94, above 70 which is deemed the overbought
threshold and signalling that a correction may be imminent.
    The broader Topix added 0.7 percent to 843.90.