Nikkei gains as yen hits 20-month low, boosting exporters

Wed Dec 26, 2012 3:09am GMT

* Nikkei up 0.4 pct, Topix up 0.5 pct
    * Weaker yen pushes up exporters
    * Real estate, banks also gain on new government hopes

    By Ayai Tomisawa
    TOKYO, Dec 26 (Reuters) - Japan's Nikkei share average rose
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 yen last traded at 85.38 to the dollar, its weakest
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 0.4 percent to 10,122.82 by the
midday break.
    Buying continued despite signs that Japanese stocks were
overbought, but trading volume was likely to stay thin due to
the Christmas holiday, market players said.
    "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."
    Among exporters, Nissan Motor Co added 1.2 percent
and Sony Corp rose 2.8 percent. A weaker 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 0.6 percent, Mitsubishi UFJ Financial Group
 adding 0.7 percent and Mizuho Financial Group 
advancing 0.7 percent.
    After rising about 17 percent over the last six weeks, the
Nikkei is in "overbought" territory, with its 14-day relative
strength index at 73.68, above 70 which is deemed the overbought
threshold and signalling that a correction may be imminent.
    The broader Topix added 0.5 percent to 842.21 in
thin trade, with 1.38 billion shares changing hands by the
midday break. That compared with last week's daily average
volume of 3.53 billion shares.