Nikkei tiptoes up; BOJ easing expectations sustain gains

Thu Oct 25, 2012 10:03pm EDT

* Fanuc drags after H1 earnings disappoint
    * Canon weak after cutting forecast but Advantest jumps
    * Expectations of easing and weaker yen bolster market

    By Sophie Knight
    TOKYO, Oct 26 (Reuters) - Japan's Nikkei share average
inched up to trade at four-week highs on Friday, as growing
expectations for significant easing from the Bank of Japan and
softness in the yen offset profit warnings from Canon Inc
 and other domestic firms.
    The Nikkei added 0.1 percent to 9,059.94 , breaking
above its 200-day average of 9,059.18.
    Sources said the Bank of Japan is expected to ease monetary
policy next week by expanding asset purchases by at least 10
trillion yen and may make a commitment to continue injecting
cash until 1 percent inflation is achieved. 
    "The yen has gained a solid foothold above 80 versus the
dollar, so we'll continue to see the positive effects of a
weaker yen," said Kenichi Hirano, operating officer at Tachibana
Securities.
    "Expectations for the BOJ to ease are running very high -
it's markedly different to previous months."
    Canon lost 1.6 percent after cutting its full-year profit
outlook by almost 10 percent and posting a weaker-than-expected
quarterly profit. Its sales were hit by anti-Japan sentiment in
China after a territorial row and slowing demand in Europe.
 
    "The market is confused about how to react to the earnings
cuts and to what extent they're priced in," said Yuuki Sakurai,
CEO of Fukoku Capital Management.
    "People don't know how to weigh up the consequences of the
diplomatic problems with China."
     Earnings from Japanese firms have hardly been stellar - 13
out of the 19 Nikkei companies reporting so far have undershot
expectations, but some companies have seen their shares gain on
relief that their results were not worse than expected.
    Advantest Corp shot 5.3 percent higher after its
downward revision in guidance for this financial year fell
within market expectations, with traders noting the chip tester
maker was still expecting a profit. 
    But index heavyweight Fanuc Ltd lost 1.8 percent
after the industrial robot maker said its operating profit had
fallen 12.6 percent in the first half and forecast a 7.6 percent
drop in that figure for the full year.
    Elsewhere, Aeon Co Ltd gained 1.3 percent after the
Nikkei business daily said the supermarket operator will buy out
Carrefour SA's Malaysian subsidiary for just over 20 billion yen
($250 million).
    The broader Topix was flat at 751.51.