November 19, 2018 / 2:48 AM / 21 days ago

Nikkei rebounds after chip-related stocks bought back; financials tumble

* Tokyo Electron, Advantest rebound after a sell-off Friday

* SMFG hits 14-month low after U.S. yields drop

* 10-year JGB yield falls to lowest since late August

By Ayai Tomisawa

TOKYO, Nov 19 (Reuters) - Japan’s Nikkei share average rebounded on Monday morning after investors covered their short positions on chip-related stocks, offsetting a drop in financials which were hurt by lower U.S. yields.

The Nikkei share average rose 0.6 percent to 21,799.11 in midmorning trade, after opening a tad lower. Last week, the benchmark index slipped 2.6 percent, hit by a drop in oil prices and tech shares.

But analysts said that Nvidia Corp’s dismal earnings, which triggered the tech sell-off, were now priced into the Japanese market and investors are scooping up the chip shares on the dips.

Tokyo Electron rose 2.9 percent, Advantest Corp added 2.4 percent and Screen Holdings surged 4.1 percent.

Also supporting sentiment was data showing Japan’s exports rose 8.2 percent in October, reversing the previous month’s decline, analysts said. It was slightly lower than a 9.0 percent increase expected by economists in a Reuters poll.

“Last month, the market had expected a rise in Japan’s exports but it declined, so even though October data missed market expectations, it was a reversal from the previous month so it is providing a relief to the market,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Elsewhere, knitting machine maker Shima Seiki Mfg. jumped 12 percent after the company said it would buy back up to 1 million of its own shares for up to 4 billion yen.

On the downside, banking and insurance tumbled 2.6 percent and 2.1 percent, respectively, after U.S. yields fell after a top U.S. Federal Reserve official on Friday said U.S. interest rates are not far off the central bank’s estimates of a neutral level, suggesting that the current tightening cycle may soon end.

Sumitomo Mitsui Financial Group tumbled 3.6 percent to hit a 14-month low of 4,120 yen, Mitsubishi UFJ Financial Group shed 3.2 percent, Dai-ichi Holdings declined 2.8 percent.

Sentiment in financial companies, which hunt for high-yielding products, was also soured by domestic bonds yields after the 10-year JGB yield dropped to 0.095 percent, the lowest since late August.

The broader Topix advanced 0.2 percent to 1,632.03. (Editing by Shri Navaratnam)

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