Nikkei gains 1 pct as company earnings not as bad as feared

Wed Oct 31, 2012 2:32am EDT

* Nikkei regains ground lost on profit-taking after the BOJ
    * Hitachi, Komatsu up after maintaining outlook guidance
    * Fuji Heavy Industries jumps after lifting earnings
guidance

    By Dominic Lau
    TOKYO, Oct 31 (Reuters) - Japan's Nikkei share average
advanced on Wednesday as investors took comfort that some firms,
such as Hitachi Ltd and Komatsu Ltd, did not cut their full-year
earnings guidance as feared.
    Index heavyweight Fanuc Corp, which gained 1.6
percent, also lent support to the index after its client and
Apple Inc supplier Hon Hai Precision Industry 
posted strong third-quarter results.
    The Nikkei rose 1 percent to 8,928.29 points,
regaining ground which was lost in the previous session after
the Bank of Japan eased policy in line with expectations,
disappointing some who had hoped the central bank would take
bolder steps to lift the economy out of deflation.
    Wednesday's gain helped the benchmark to end the month 0.7
percent higher, its third straight monthly gain. The Nikkei is
up 5.6 percent this year.
    "We obviously had that sell-off yesterday after the BOJ ...
We are seeing a bit of buying," a senior trader at a foreign
bank said. "I guess yesterday's results were perhaps a little
bit better than expected." 
    Komatsu climbed 3.2 percent after the construction
machinery maker maintained its full-year operating profit
forecast, easing concerns it would cut its outlook when it
reported first-half results after the market close on Tuesday.
    Many firms have slashed their profit forecasts this earnings
season as a stuttering global growth and a boycott of Japanese
products in China over a territorial dispute threatens revenues.
    Electrical machinery maker Hitachi and electronics
parts manufacturer Omron Corp also reassured investors
by retaining their full-year earnings outlooks.
    Hitachi gained 3.2 percent and Omron gained 5.1 percent.
    Fuji Heavy Industries jumped 6.7 percent to an
11-year high a fter the carmaker hiked its annual operating
profit forecast by 22 percent.
    Sentiment also picked up on Wednesday after the yen did not
firm as much as investors had feared it would, said Ryota
Sakagami, chief strategist of equity research at SMBC Nikko
Securities.
    "It's been rather unclear why the yen weakened so much
recently, so it was encouraging to see that it's likely due to
the U.S. recovery gathering momentum and not just expectations
of easing," Sakagami said.
    The yen was at 79.575 yen to the dollar, down from
Tuesday's high of 79.275 yen, a slight positive for exporters
fretting about shrinking overseas profit due to an unfavourable
exchange rate.
    Mobile operator Softbank Corp, the most-traded
stock on the main board by turnover, added 0.8 percent and
consumer electronics maker Panasonic Corp jumped 4.5
percent ahead of their results after the market close.
    After the bell, Panasonic reported a 16 percent gain in
second-quarter operating profit as it moves away from
loss-making TVs in favour of batteries, household appliances and
other businesses outside its struggling consumer electronics
mainstay. 
    
    EARNINGS IN FOCUS
    But some market participants said they did not have much
faith in the index's gains as Wall Street has been closed for
two days due to a massive storm and there was uncertainty about
how U.S. markets would react to the disaster later in the day.
    "Results from exporters are not looking good, which makes me
think recent gains, including today's, are a bit filmsy," said
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ
Morgan Stanley. 
    As of Monday, 63 percent of the 27 Nikkei companies that
have reported quarterly earnings so far had undershot market
expectations, according to Thomson Reuters StarMine. That
compared with 54 percent in the previous quarter.
    Ricoh Co Ltd dropped 3.1 percent after the office
equipment maker missed guidance for its interim operating
profit.
    Brewer Asahi Group Holdings slipped 1.7 percent on
concerns that the company may fall short of its full-year
operating profit forecast after it reported weak nine-month
results. 
    A survey of 10 Japan-based fund managers showed allocations
for Japanese equities slipped to 33.9 percent this month from
34.7 percent in September, marking its fourth straight month of
decline. 
    The broader Topix index gained 1.2 percent to 742.33
in relatively active trade, with 1.82 billion shares changing
hands, down f r om Tuesday's nearly two-week high of 2.04 billion
shares but up from last week's average of 1.66 billion.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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