December 15, 2016 / 2:22 AM / a year ago

Nikkei rises as yen weakens after U.S. raises interest rates

* Yellen will have to continue communicating with market - analysts

* Mining stocks drop hit by sliding oil prices

By Ayai Tomisawa

TOKYO, Dec 15 (Reuters) - Japan’s Nikkei share average rose on Thursday morning as the dollar surged against the yen after the U.S. Federal Reserve raised rates for the first time in a year and signalled further hikes could come at a faster pace than the market had expected.

The Nikkei rose 0.3 percent to 19,311.22 in midmorning trade to hover at its one-year highs, while the Topix rose 0.4 percent to 1,544.81 after turning positive on the year earlier. In early trade, the Topix traded above 1,547.30, the closing price of the last trading day of 2015.

U.S. stocks fell overnight as the Fed’s rate rise of 25 basis points to 0.5-0.75 percent was well flagged but investors were spooked when the “dot plots” of Federal Open Market Committee members’ projections showed a median of three hikes next year, up from two previously.

“Japanese stocks are rising because the weak yen is helping overall sentiment. But in the longer term, investors expect that the Fed will continue communicating with the market to ease worries about negative risks,” said Masaru Hamasaki, head of market & investment information department at Amundi Japan.

The dollar surged more than 1.5 percent overnight to a 10-month high of 117.85 yen and was last at 117.64.

Exporters gained ground, with Toyota Motor Corp rising 2.0 percent, Honda Motor Co adding 1.8 percent and Advantest Corp advancing 1.9 percent.

Rie Shigekawa, a portfolio manager at Fidelity International, said that after the Fed’s decision, she expects the yen to remain weak against the dollar and Japanese yields to be pushed higher, despite the Bank of Japan’s policy of quantitative and qualitative monetary easing with yield curve control.

“I have increased my weight in financials, particularly via the banks and insurance sectors, and global cyclicals, as once we incorporate the current forex levels and monetary conditions, their valuations become cheaper,” she said.

Bucking the strength was the mining sector after oil prices dropped as a hike in U.S. interest rates prompted a flood of money away from commodities. Inpex Corp dropped 1.5 percent and Japan Petroleum Exploration Co tumbled 2.2 percent.

The JPX-Nikkei Index 400 gained 0.4 percent to 13,830.65.

Editing by Simon cameron-Moore

Our Standards:The Thomson Reuters Trust Principles.
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