Nikkei scales 32-month high; Sharp shares down on Apple report

Tue Jan 15, 2013 1:09am GMT

* Nikkei, Topix both rise 1 pct
    * Sharp falls on report of Apple cuts

    By Dominic Lau
    TOKYO, Jan 15 (Reuters) - Japan's Nikkei share average
climbed 1 percent to a 32-month high on Tuesday, driving the
benchmark further into "overbought" territory, as persistent
weakness in the yen boosts demand for exporters' shares.
    The Nikkei rose 110.23 points to 10,911.80, setting
its sights on the 11,000-mark, a level not seen since late April
2010. It rose 1.1 percent last week to log its ninth straight
week of gains and its longest such winning run since 1988.
Monday was a public holiday in Japan.
    Tuesday's bidding took the benchmark Nikkei deeper into
"overbought" territory, with its 14-day relative strength index
at 80.05, way above the 70-mark which is deemed overbought and
often signals a near-term correction. 
    "Short-term correction is getting more likely given that
bullish sentiment ... has become more widespread. In terms of my
positioning, I have trimmed down the exposure to stocks which
have skyrocketed in the past two months," said Yasuo Sakuma,
portfolio manager at Bayview Asset Management.
    The Nikkei has rallied 26 percent over the past two months,
spurred by the weakness in the yen after Prime Minister Shinzo
Abe called on the Bank of Japan to adopt aggressive policy to
energise the ailing economy, including setting an inflation
target of 2 percent.
    Exporters led the index higher on Tuesday, including Suzuki
Motor Corp, Daikin Industries Ltd, Honda Motor
Co, Olympus Corp and auto parts maker Denso
Corp, which were up between 1.2 and 7.5 percent.
    Japanese automakers are aiming to shake off the lingering
effects of natural disaster in 2011 and capitalise on the
weakening yen and new products to increase sales in the United
States, after a robust 2012.    
    The yen was quoted at 89.55 to the dollar on Tuesday
after falling 0.4 percent to a 2-1/2-year low of 89.67 yen in
the previous session, while the Japanese currency was traded at
119.83 to the euro.
    Sharp Corp, however, sagged as much as 7 percent
after the Nikkei newspaper said on Monday that Apple Inc
 has slashed orders with suppliers of LCD panels for the
iPhone 5 in the current quarter due to weak demand.
    Other Apple suppliers in Japan also came under pressure,
with Murata Manufacturing Co Ltd down 2.7 percent and
Ibiden Co Ltd off 1.4 percent.
    The broader Topix gained 1 percent to 908.03.
    Japanese equities carry a 12-month forward price-to-earnings
ratio of 13, ahead of the U.S. S&P 500's 12.9 and the
pan-European STOXX Europe 600's 11.4, data from Thomson
Reuters Datastream showed.