Nikkei jumps 2.2 pct to 2-week closing high in heavy trade

Fri Nov 16, 2012 1:33am EST

* Nikkei logs best one-day percentage rise in 2 months
    * Topix up 1.9 pct, with volume hitting 8-month high
    * Exporters rally as yen hit 6-1/2-month vs dollar
    * Kirin falls, looks to buy F&N's food & beverage business

    By Dominic Lau
    TOKYO, Nov 16 (Reuters) - The Nikkei average rallied 2.2
percent on Friday, regaining the key 9,000-mark, as investors
bet Japan's main opposition party will win next month's election
and put more pressure on the central bank to stimulate the
ailing economy.
    The call by the Liberal Democratic Party's leader Shinzo
Abe, a former prime minister, for the Bank of Japan to push
interest rates to zero or below zero to spur lending has
whipsawed the yen to a 6-1/2-month low against the dollar,
sending shares in exporters sharply higher.
    Exporters had been battered by worries about U.S. "fiscal
cliff", the euro zone's debt crisis and slowing demand in China,
and several, including Nissan Motor Co, Canon Inc
, Nikon Corp and Mazda Motor Co,
surged more than 5 percent.
    The Nikkei climbed 194.44 points to a two-week
closing high of 9,024.16, and logged its biggest one-day
percentage rise in two months. The index has risen 3 percent
this week, helped by a 4.2 percent jump in the past two days.
    "Japanese shares have been underperforming their global
peers, so investors may take this domestic trading cue as a
chance to chase the market higher," said Kenji Shiomura, an
analyst at Daiwa Securities.
    The benchmark Nikkei is up 6.7 percent this year, trailing a
7.6 percent rise in the U.S. S&P 500 and an 8.6 percent
gain in the pan-European STOXX Europe 600.
    In terms of valuation, Japanese equities carry a 12-month
price-to-book ratio of 0.9, much cheaper than S&P 500's 1.9 and
STOXX Europe 600's 1.4, data from Thomson Reuters Datastream
showed.
    The broader Topix climbed 1.9 percent to 751.34,
with trading volume hitting an eight-month high. 
    Nomura Securities highlighted Nikon, Sumitomo Heavy
Industries Ltd, Daikin Industries Ltd,
electronic parts maker Nidec Corp, Shin-Etsu Chemical
, Suzuki Motor Corp and auto parts maker Denso
Corp as among the firms that benefit the most from a
softer yen.
    
    CHERRY-PICKING WINNERS
    Nicholas Smith, Japan strategist at CLSA, said his preferred
plays were real estate companies Mitsubishi Estate Co Ltd
 and Mitsui Fudosan Co Ltd, and brokerage
Nomura Holdings.        
    "Particularly since the global financial crisis, with
capacity up the wazoo, that newly minted money is unlikely to go
into capex. It is not impossible that some goes into
consumption," Smith said in a report.
    "But the lion's share is likely to take the path of least
resistance straight up the middle into asset price inflation.
Two obvious beneficiaries are real estate and construction."
    Nomura advanced 5 percent, while Mitsubishi Estate and
Mitsui Fudosan added 1.6 and 2.3 percent, respectively.
    Investors demand for Nikkei call options, which essentially
bet on the index to go higher, were brisk, outnumbering the
demand for put options.
    According to Reuters data, Friday's most-traded Nikkei index
options were a call with a strike price of 9,500, a 5.3 percent
upside from Friday's close, and a December maturity
.
    The next most-traded was a December call at 9,250
, followed by a December put at 8,500 
and another call at 9,750.
    Among the handful of losers on the Nikkei, brewer Kirin
Holdings Co Ltd dropped 2.2 percent after a consortium
led by Overseas Union Enterprise Ltd said Kirin will
offer to buy Fraser and Neave Ltd's food and beverage
business for $2.2 billion if OUE's bid for F&N is successful.