Nikkei nudges higher but Europe unease weighs on upside
TOKYO, June 13 (Reuters) - Japan's Nikkei share average inched up in early trade on Wednesday on Wall Street's overnight advances but gains were limited as investors remain concerned about Spain's struggle to finance its own debt. The Nikkei rose 0.7 percent to 8,596.36, while the broader Topix stepped up 0.3 percent to 726.78. Most sectors were lifted from Tuesday's troughs, with steelmakers outperforming the index. Nippon Steel gained 2.4 percent, pushing the iron and steel sector up 1.3 percent as the top performing sector. "The market is the quietest it's been for a long time with no big news out, although prices are looking stronger," said a partner at a foreign hedge fund. The Nikkei was supported by a 1.7 percent gain for heavily weighted Fast Retailing Co Ltd, the operator of Uniqlo clothing stores, bringing the stock price to 15,460 yen, but it was still well below its 14-day moving average of 16,651. Risk sentiment improved slightly, with investors relying less on defensives, with both the food sector and risk-off mainstay Japan Tobacco both underperforming the market with a gain of 0.2 percent. Nippon Paper Group Inc rose 1.5 percent after the company said it would buy a 55 percent stake in Thai firm SCG Paper Public Co and install machinery with a production capacity of 43,000 tons at an SCG Paper Mill in spring 2014. The joint venture, involving 5.5 billion yen ($69 million) of investment, is to be concluded by the end of this month at the earliest. Hitachi Ltd gained 1.3 percent after announcing plans to buy German power plant service Xervon Energy GMBH for several billion yen by the end of 2012, according to the Nikkei business daily. Risk appetite was tempered after Spanish bond yields hit a euro-era high on worries about the effectiveness of a bailout agreed over the weekend for Spain's banks. They later eased off these highs, helping U.S. stocks stage a comeback rally and rise more than 1 percent. The Nikkei closed down 1 percent at 8,536.72 on Tuesday on doubts about the details of the Spanish bailout. "There's not many domestic factors driving the Japanese market at the moment so we're just swinging up and down in the same territory," said Toshiyuki Kanayama, senior market analyst at Monex. Investors are also unwilling to make major changes to their positions ahead of weekend Greek elections that could result in Greece exiting the euro zone, as well as a G20 meeting next week that many hope could produce a coordinated response to economic turmoil in Europe. Market players are also hoping the Bank of Japan will expand its easing programme at a policy meeting that ends on Friday. The BOJ bought 26.3 billion yen worth of exchange-traded funds on Tuesday to support the market. On June 4, the Nikkei hit a six-month low and the broader Topix sank to a 28-year low due to concern about the fate of the euro zone, as well as worries about an economic slowdown in the U.S. and China. The Nikkei recovered to eke out a weekly gain and snap a nine-week losing streak on Friday, its worst run in 20 years.