July 25, 2018 / 7:04 AM / 5 months ago

Nikkei rallies, draws support from China stimulus hopes

* Nikkei up for 2nd day, not enough to offset Monday’s losses

* Steelmakers, metal firms climb on China stimulus hopes

* Nikkei has a resistance level at 23,000

* About 40 companies to announce earnings on Wednesday

By Tomo Uetake

TOKYO, July 25 (Reuters) - Japanese shares rallied for a second day on Wednesday, buoyed by gains in steelmakers and metal producers, as markets cheered Beijing’s pledges of a more vigorous fiscal policy.

The benchmark Nikkei share average rose 0.46 percent to 22,614.25, erasing more than half of its losses from Monday after media reports that the Bank of Japan may adjust its policy.

Still, the upside was seen as limited for now with the 23,000-mark considered a stubborn resistance for the Nikkei.

Some sectors of the market “have certainly got a boost from the news of China stimulus plans,” said Yuya Fukue, trader at Rheos Capital Works. “I think the hopes will continue to provide a tailwind for some time.”

The biggest beneficiaries included steelmakers , non-ferrous metal firms and machinery makers , which rose 2.0 percent, 2.3 percent and 1.0 percent, respectively.

They have been among the worst hit by concern over a Sino-U.S. trade war.

Among them, JFE Holdings rose 3.0 percent and Sumitomo Metal Mining 3.8 percent.

Their rebound came after Chinese state radio, citing the cabinet, said earlier this week that Beijing would adopt a more vigorous fiscal policy to help tackle external uncertainties without resorting to strong policy stimulus.

Bucking the overall trend, Yamato Holdings dropped 1.7 percent after the logistics provider announced it overcharged corporate clients by about 1.7 billion yen ($15 million) for moving services, prompted by a whistleblower’s alert.

The Nikkei’s heavyweight Fast Retailng fell for the third trading day in a row, down 0.7 percent, hit by speculation that the Bank of Japan could wind back its purchases in the Nikkei-linked exchange-traded funds.

Reuters and other media reported over the weekend that the BOJ could debate changes in its monetary policy at its meeting early next week, with potential tweaks to its interest rate targets and stock-buying techniques on the table.

The broader Topix gained 0.38 percent to 1,753.48, while the JPX-Nikkei Index 400 was up 0.39 percent at 15,517.35.

Mitsubishi Motor dropped 3.9 percent on profit-taking, pulling away from nine-month highs marked the previous day. The automaker announced earnings that beat market expectations on Tuesday.

The fiscal first-quarter earnings season enters full swing on Wednesday, with about 40 companies, including Shin-Etsu Chemical, Nidec and Fanuc, announcing results.

$1 = 111.29 yen Reporting by Tomo Uetake; Editing by Jacqueline Wong

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