TOKYO: Japan's Nikkei average rose 1 percent on Thursday, Aug 19 with domestic investors seen picking up stocks on dips after the index hit an eight-month closing low this week, but the yen's strength against the dollar kept further gains in check.
Investors are awaiting the outcome of Monday's meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa, and speculation has heightened that the central bank may ease monetary policy further ahead of the meeting.
The Sankei newspaper reported on Thursday that the BOJ may either expand the size of its fund supply to 30 trillion yen ($352 billion) from the current 20 trillion yen, or extend the duration of cheap, fixed-rate loans to banks to six months from the present three months.
"There's talk in the market that domestic investors such as pension funds are buying as stocks have become rather cheap. Moves are mostly driven by supply and demand factors," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
"Further gains may be now limited as the focus is shifting to next week's Kan-Shirakawa meeting."
The benchmark Nikkei gained 95.00 points to 9,335.54 by the midday break. It rose 0.9 percent the previous day.
The broader Topix rose 0.9 percent to 842.42.
Whether the Nikkei can stay above 9,000 is a big focus this week, market players say, though downside tries have been checked just under 9,100 several times over the past week. The same level became support several times last year.
Below that point, the Nikkei's next support lies at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.
Market players say that if the dollar breaks below 85 yen, the Nikkei could also fall below 9,000. In early Asian trade, the dollar inched up to 85.72 yen, still not far from a 15-year low of 84.72 yen hit on trading platform EBS last week.
"The Nikkei remains at a precarious level. If U.S. stocks were to slide on some negative news again, the index could easily go below 9,000. The market is stuck in range trade in an environment with risk potential," said Kenichi Hirano, operating officer at Tachibana Securities.
"There are hopes in the market for the Kan-Shirakawa meeting, but what they will really need to emphasise at the end is their support for a weaker yen, rather than a couple of economic measures."
Canon Inc and other exporters gained as the dollar clawed higher against the yen on the Sankei report.
Canon rose 2 percent to 3,650 yen, Toyota Motor Corp gained 1.3 percent to 3,070 yen and Nissan Motor Co added 1.7 percent to 666 yen.
Chip equipment maker Tokyo Electron climbed 4.8 percent to 4,350 yen after U.S. peer Applied Materials Inc forecast quarterly results that beat Wall Street estimates, as well as posting better-than-expected results for the quarter ended Aug. 1. - Reuters
Investors are awaiting the outcome of Monday's meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa, and speculation has heightened that the central bank may ease monetary policy further ahead of the meeting.
The Sankei newspaper reported on Thursday that the BOJ may either expand the size of its fund supply to 30 trillion yen ($352 billion) from the current 20 trillion yen, or extend the duration of cheap, fixed-rate loans to banks to six months from the present three months.
"There's talk in the market that domestic investors such as pension funds are buying as stocks have become rather cheap. Moves are mostly driven by supply and demand factors," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
"Further gains may be now limited as the focus is shifting to next week's Kan-Shirakawa meeting."
The benchmark Nikkei gained 95.00 points to 9,335.54 by the midday break. It rose 0.9 percent the previous day.
The broader Topix rose 0.9 percent to 842.42.
Whether the Nikkei can stay above 9,000 is a big focus this week, market players say, though downside tries have been checked just under 9,100 several times over the past week. The same level became support several times last year.
Below that point, the Nikkei's next support lies at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.
Market players say that if the dollar breaks below 85 yen, the Nikkei could also fall below 9,000. In early Asian trade, the dollar inched up to 85.72 yen, still not far from a 15-year low of 84.72 yen hit on trading platform EBS last week.
"The Nikkei remains at a precarious level. If U.S. stocks were to slide on some negative news again, the index could easily go below 9,000. The market is stuck in range trade in an environment with risk potential," said Kenichi Hirano, operating officer at Tachibana Securities.
"There are hopes in the market for the Kan-Shirakawa meeting, but what they will really need to emphasise at the end is their support for a weaker yen, rather than a couple of economic measures."
Canon Inc and other exporters gained as the dollar clawed higher against the yen on the Sankei report.
Canon rose 2 percent to 3,650 yen, Toyota Motor Corp gained 1.3 percent to 3,070 yen and Nissan Motor Co added 1.7 percent to 666 yen.
Chip equipment maker Tokyo Electron climbed 4.8 percent to 4,350 yen after U.S. peer Applied Materials Inc forecast quarterly results that beat Wall Street estimates, as well as posting better-than-expected results for the quarter ended Aug. 1. - Reuters
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