Tuesday, August 30, 2011

Nikkei up for a 4th day but stops short of 9,000

TOKYO: The Nikkei rose 1.5 percent on Tuesday, poised to put in a fourth straight day of gains, helped by stronger-than-expected U.S. consumer spending and a merger between two big Greek banks but stopped short of breaking above 9,000.

Some market participants said Japanese institutional investors were picking up exporters such as automakers but foreign investors remained on the sidelines, reluctant to step in before more confirmation from data that the U.S. economy was not slipping back into recession.

"Domestic funds are picking up Topix core 30 stocks such as Toyota," said a fund manager at a Japanese asset management firm who asked not to be quoted by name.

"If the Nikkei trades above 9,000, buying may slow down."

The benchmark Nikkei rose in light trade to 8,986.45 by the midday break. The broader Topix index climbed 1.8 percent to 772.35.

Analysts also said some investors will likely stay cautious as news reports on the current quarter's earnings are likely emerge in the coming weeks.

"An increasing number of investors have already shifted their focus to April-September earnings," said Fujio Ando, senior managing director at Chibagin Asset Management.

"There are many factors that could affect sentiment as well. The yen is still strong and a new (Japanese) administration is just about to start. I would not be surprised if they want to reduce risk taking."

U.S. consumer spending rose 0.8 percent in July, its largest increase in five months, helped by strong demand for motor vehicles.

Toyota Motor rose 1.5 percent to 2,755 yen, Honda Motor gained 2.6 percent to 2,477 yen and Nissan Motor added 3.3 percent to 696 yen.

Analysts said valuations for Tokyo shares continue to be attractive, with the average price-to-book ratio of shares traded on the Tokyo stock exchange's first section around 0.94.

Banking shares were also higher following gains in their U.S. and European counterparts after Greek banks Alpha and EFG Eurobank sealed a merger with help from Qatar, shoring up a sector battered by the euro zone's debt crisis.

Mitsubishi UFJ Financial Group gained 3.3 percent to 345 yen, Mizuho Financial Group added 1.8 percent to 115 yen and Sumitomo Mitsui Financial Group climbed 2.8 percent to 2,249 yen.

Stainless steel sheet maker Nippon Yakin Kogyo Co ''skidded 15 percent to 167 yen, becoming the second biggest percentage loser on the main board after it said it plans to raise up to 5.5 billion yen in a public share sale.

Volume was thin, with 808 million shares changing hands on the Tokyo stock exchange's main board and the day's volume looked likely to be less than than last week's average of 2.04 billion shares. ' Reuters


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