Tokyo, Mar 25, 2008 (Jiji Press) - Stocks advanced on the Tokyo Stock Exchange Tuesday morning, as Wall Street's strong performance overnight and the dollar's firmness versus the yen spurred buying in export-oriented issues.
At the morning close, the 225-issue Nikkei average stood up 166.24 points, or 1.3 pct, from Monday at 12,646.33. On Monday, the Nikkei edged down 2.48 points.
The TOPIX index of all first-section issues was up 10.31 points at 1,234.46, after finishing up 4.11 points in the previous session.
"The U.S. and Japanese stock markets both have entered a recovery phase," said Kenichi Hirano, equity general manager at Tachibana Securities Co. "I believe that the latest recovery momentum will last for a while, pushing up the Nikkei average to levels around 13,000."
The Tokyo market reacted in a straightforward manner to Wall Street's extended rally and the dollar's rise above the key 100-yen line, both of which reflected J.P. Morgan Chase's decision to sharply raise its offer for troubled Bear Stearns and a stronger-than-expected U.S. existing home sales report for February.
Purchases of stocks with high dividend yields continued to support the market, as Tuesday is the last day to obtain rights to receive year-end dividends from companies closing their books in March.
But the Tokyo market's advance this morning failed to come with solid turnover, enhancing the widely held view that the recent gains are nothing more than a technical rebound.
"There are few positive incentives to chase stock prices higher at the moment," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC Co. "Investors need to have brighter outlooks for the Japanese and U.S. economies before placing their money into stocks."
According to Tachibana's Hirano, equity analysts worldwide have already formed a consensus that the U.S. economy will stay in dire straits up until the April-June quarter, but opinions have been widely divided over what will happen after that.
"Some expect the U.S. economy to avoid falling into a recession and to pick up in July-September, while the most pessimistic analysts predict that U.S. recession will linger throughout this year," Hirano said. "Such divisions in opinions make it difficult for investors to decide their investment strategies."
Winning issues eclipsed losers 1,131 to 470 on the TSE's first section in the morning, while 116 issues were flat.
Half-day volume came to 828 million shares.
Automakers Toyota, Honda and Nissan remained firm.
Among technologies, Canon, Toshiba and Sharp enjoyed solid gains.
Nippon Steel attracted brisk buying following a media report that the company will build a large-scale blast furnace steel mill in Brazil jointly with major Brazilian steelmaker Usiminas.
Realtors Mitsui Fudosan, Mitsubishi Estate and Sumitomo Realty came under selling pressure, reflecting concern that the U.S. subprime mortgage crisis may slow fresh real estate investments.
Profit-taking hit Oji Paper and Nippon Paper.
Copyright © 2010 JCN. All rights reserved. A division of Japan Corporate News Network KK.
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