Nikkei supported by global easing optimism

Mon Jul 2, 2012 9:55pm EDT

* Weak U.S. ISM data fans expectation of Fed's QE3
    * Market also supported by ECB, BOJ easing hopes
    * Financials lead gains, banks helped by brokerage upgrade
    * Kawasaki Kisen plummets after share offer plan

    TOKYO, July 3 (Reuters) - Japan's Nikkei share average rose
on Tuesday, with financial issues leading gains, after surprise
weakness in U.S. manufacturing data renewed speculation the U.S.
Federal Reserve may step in to boost growth.
    Investors expect the world's other central banks, including
the European Central Bank and the Bank of Japan, may also ease
policy this month.
    The Nikkei rose 0.5 percent to 9,044.55, though it
stopped short of testing Monday's intraday high of 9,103.79,
with traders expecting substantial selling around 9,100 from
investors, among other Japanese retail investors.
    U.S. manufacturing shrank in June for the first time in 
nearly three years as new orders plummeted, with the Institute 
for Supply Management index of national factory activity falling
to 49.7 from 53.5 the month before, missing expectations of 
52.0. 
    "As Europe seems to be stabilising for now, the focus is now
on the state of the global economy but the ISM figures were 
terrible," said Kenichi Hirano, market analyst at Tachibana 
Securities.
    "Still, what is equally surprising is the resilience of U.S.
shares, which suggests investor sentiment remained strong 
because they link bad data to the chance of the Fed's QE 
(quantitative easing)," he added.
    With the European Central Bank widely expected to cut rates
this week, some investors think risk assets around the world are
likely to be on firm footing despite fresh doubts about the euro
zone's deal announced last week. 
    "Investors have been unwinding risk-off trading since early
June and I think that will continue for now despite concerns
over the global economy in the medium term," said Soichiro
Monji, chief strategist at Daiwa SB Investments.
    "Compared to one month ago, Europe has clearly made some
progress ... After a likely ECB rate cut, investors may shift
funds out of bunds to riskier assets," he added.
    Many market players also speculate that the Japanese central
bank could increase its asset purchases later this month.
    Bank shares rose 1.5 percent, in part helped by
Daiwa's upgrade of the country's top three banks. MUFG 
rose 2.1 percent while SMFG climbed 1.5 percent.
    The strength of bank shares helped to lift the broader Topix
index 0.8 percent to 775.60. 
    On top of banks, insurers climbed 1.8 percent
while securities brokerage gained 1.4 percent.
    On the other hand, Kawasaki Kisen, one of Japan's
top three shippers, shed 13 percent to 137 yen after the
shipping company said on Monday it would raise 28.6 billion yen
by issuing up to 200 million new shares for capital spending,
which will increase the total number of shares by 26 percent.
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