Nikkei gains ahead of BOJ meeting; Sharp, Nomura advance

Mon Oct 29, 2012 10:58pm EDT

* Nomura up after earnings supported by fixed income gains
    * Sharp up on report of panel alliance talks with U.S. firms
    * Honda extends losses after Monday's profit warning

    By Dominic Lau
    TOKYO, Oct 30 (Reuters) - Japan's Nikkei average edged up on
Tuesday ahead of a widely expected policy easing by the Bank of
Japan later in the day, while brokerage Nomura Holdings 
climbed after its quarterly results were supported by fixed
income gains.
    Nomura advanced 2.5 percent after it posted its fourth
straight quarterly profit as an upswing in its fixed income
operations helped it counter weak equity markets and the fallout
from an insider trading probe.  
    "Nomura's results weren't nearly as bad as expected ... So
far a lot of the results that you have haven't been overly bad,"
a senior trader at a foreign brokerage said.
    "You also have the yen weakening...since the market opens,
so there is probably somebody who is taking a bit of a punt that
the BOJ will do something." 
    The Nikkei gained 0.4 percent to 8,966.00, facing
resistance at its five-day moving average at 8,967.58, while the
yen was quoted at 79.90 to the dollar, down from Monday's
high of 79.53 yen.
    The BOJ is expected to expand its asset buying programme by
10 trillion yen ($125.3 billion), as slumping exports and
factory output heighten pressure for bolder action to support an
economy on the cusp of recession. 
    The benchmark Nikkei has been buoyed over the past month by
a softer yen amid expectations that the BOJ will ease monetary
policy further. The index is up 6 percent this year.
    But Hisao Matsuura, equity strategist at Nomura Securities,
said the market had already factored in the 10 trillion yen
increase in the asset purchasing programme by the BOJ and that
investors may likely take profit afterward.
    "The next action from the BOJ will likely come in December,"
he said, adding that the Nikkei would be supported by further
easing expectations later in the year.
    Nomura expected the Nikkei to reach 9,500 by the year-end, a
6 percent upside from current levels. 
    Sharp Corp climbed 5.6 percent after the Kyodo news
agency quoted sources as saying that the struggling TV maker had
entered into talks with Apple Inc, Google Inc 
and Microsoft Corp to provide the three U.S. companies
with its IGZO displays.
    It was the second-most traded stock on the main board by
turnover.
    Other gainers included Keyence Corp, which jumped
6.9 percent as analysts expected the maker of detection devices
and measuring control equipment to post strong full-year
earnings after it reported its first quarter results ended
September.  
    The broader Topix index added 0.3 percent to 742.68 
in relatively light trading, with volume at 45 percent of its
full daily average for the past 90 days.
    Nevertheless, overall this quarterly earnings season has
been weak so far, with 63 percent of the 27 Nikkei companies
that have reported undershooting market expectations, according
to Thomson Reuters StarMine. That compared with 54 percent in
the previous quarter.
    Honda Motor Co slipped 0.5 percent, extending the
previous session's 4.7 percent decline after it cut its
full-year net profit forecast by a fifth due to slowing sales in
China over a territorial dispute. It was the most traded stock.
    Rival Nissan Motor Co, which has larger exposure to
China than Honda, eased 0.8 percent.
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