Nikkei gains as investors pin hopes on BOJ easing

Sun Oct 28, 2012 9:46pm EDT

* Real estate sector gains on expectations of BOJ action
    * NTT DoCoMo drops after cutting profit outlook
    * Nippon Sheet Glass up, forecast better than expected

    By Sophie Knight
    TOKYO, Oct 29 (Reuters) - Japan's Nikkei share average rose
on Monday as investors bet that the Bank of Japan will
substantially expand its easing programme when it meets on
Tuesday, though NTT DoCoMo Inc weighed on the index
after a profit warning.
    The Nikkei added 0.2 percent to 8,949.43 by
mid-morning after tumbling off a four-week high on Friday. The
broader Topix was also up 0.2 percent, at 742.50. 
    The benchmark has gained 5 percent since Oct. 12 on
expectations that the BOJ will expand its asset purchases by at
least 10 trillion yen, and on hopes that it may commit to
injecting cash until 1 percent inflation is
achieved. 
    "I don't think there'll be disappointment if they end up
injecting 20 trillion yen or even 10 trillion, but it could be a
case of buy-the-rumour, sell-the-fact," said Tetsuro Ii, CEO of
Commons Asset Management. 
    Real estate, an industry expected to benefit from possible
further purchases of real estate investment trusts by the 
central bank, was the second-best performing subindex
, with a gain of 1.5 percent.  
    Mobile provider NTT Docomo Inc lost 4.5 percent to
hit a lifetime low, after cutting its full-year operating profit
outlook by 9 percent as it struggles to catch up to
iPhone-selling rivals Softbank Corp and KDDI Corp
.
   "Ultimately we think this proves that unless DoCoMo
introduces the iPhone, the impact on its finances will become
all the greater," said Morgan Stanley MUFG analyst Tetsuro
Tsusaka in a note.
    The stock was the most-traded stock by turnover on the main
board, ahead of Sumitomo Mitsui Financial Group Inc,
which gained 1.4 percent after estimating that first-half net
profit beat guidance by a wide margin, partly thanks to its
trading of Japanese bonds amid high appetite for sovereign debt.
 
    Honda Motor Co Ltd, Nomura Holdings Inc,
Renesas Electronics Corp are among companies reporting
after the bell on Monday.
    Sixty-seven percent of the 21 Nikkei companies that have
reported results so far have undershot analysts' predictions in
Thomson Reuters' StarMine.
    But many market participants say that exaggerated pessimism
ahead of the earnings season has meant robust share price gains
for quite a few stocks that did not have results that were worse
than analysts' predictions.
    Nippon Sheet Glass Co Ltd rose 5 percent after the
Nikkei business newspaper said the company was likely to post a
3 billion yen ($38 million) operating loss for the second
quarter, smaller than the 4.5 billion yen loss forecast and
narrower than the 8.5 billion yen loss in the first quarter. 
    NEC Corp added 2.1 percent after beating forecasts
with an operating profit of 47.4 billion yen for the first half,
despite logging a small operating loss in the first quarter.