Nikkei gains ahead of BOJ meeting; Sharp, Nomura advance

TOKYO Mon Oct 29, 2012 11:16pm EDT

TOKYO (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 (8604.T) 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 .N225 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 program 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 program 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 (6753.T) 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 (AAPL.O), Google Inc (GOOG.O) and Microsoft Corp (MSFT.O) 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 (6861.T), 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 .TOPX 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 (7267.T) 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 (7201.T), which has larger exposure to China than Honda, eased 0.8 percent.

($1 = 79.8150 Japanese yen)

(Editing by Jacqueline Wong)

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