September 7, 2017 / 6:36 AM / a year ago

Nikkei rebounds as U.S. debt ceiling deal helps risk appetites recover

* Trump forges deal for 3-month debt ceiling reprieve

* Automakers rally, McDonald’s Japan up on strong sales

By Ayai Tomisawa and Lisa Twaronite

TOKYO, Sept 7 (Reuters) - Japan’s Nikkei share average rose on Thursday, pulling away from the previous session’s four-month intraday lows after news of an agreement in Washington to raise the U.S. debt limit helped restore investors’ risk appetites.

The Nikkei ended 0.2 percent higher at 19,396.52.

Major U.S. stock indexes finished higher overnight after President Donald Trump forged a surprising deal with Democrats in Congress on Wednesday to extend the U.S. debt ceiling and provide government funding until Dec. 15.

Investors also pondered news that U.S. Federal Reserve Vice Chair Stanley Fischer will step down in mid-October, potentially accelerating Trump’s opportunity to reshape the direction of the central bank.

Trump also said on Wednesday that he would get into “great detail” over the next two weeks on his U.S. tax reform plan, which has been short on specifics.

He also warned on Wednesday that the United States would no longer tolerate North Korea’s actions after its sixth nuclear test, but said the use of military force against Pyongyang would not be his “first choice.”

Gavin Parry, managing director of Parry International Trading in Hong Kong, said “North Korean fears have calmed, and you have some glimmers visible at the end of the tunnel, with Trump talking about tax reform.”

“Talk of tax reform tends to bring a little bit of ‘animal spirit’ back to markets,” he said. “This carries over to Japan, where the Bank of Japan’s monetary policy is expected to remain easy, with no tapering on the horizon there.”

Data released earlier on Wednesday showed that foreign investors remained net sellers of Japanese stocks for the week ending on Sept. 2.

Investors remained wary of Hurricane Irma, which could strike Florida over the weekend.

Japanese automakers attracted buying on Thursday, with Toyota Motor Corp rising 1.1 percent and Honda Motor Co surging 1.4 percent.

McDonald’s Holdings Company Japan rose 1.6 percent, after the fast food restaurant operator said its August same-store sales climbed 14.5 percent from a year earlier.

Construction-related shares gained, with Komatsu Ltd surging 3.0 percent and Hitachi Construction Machinery Co rising 1.9 percent.

But small-to-mid cap stocks largely lagged broader gains, with the Mothers market of start-up shares down 1.5 percent, moving back toward more than four-month lows plumbed on Wednesday.

The broader Topix gained 0.4 percent at 1,598.24 and the JPX-Nikkei Index 400 added 0.3 percent to 14,161.14. (Reporting by Lisa Twaronite and Ayai Tomisawa; Editing by Richard Borsuk)

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