Nikkei climbs to 7-month closing high on exporters' gains

Fri Nov 30, 2012 1:58am EST

* Nikkei rises 0.5 pct, Topix up 0.3 pct
    * Nikkei gains 5.8 pct in Nov, best monthly rise since Feb

    By Dominic Lau
    TOKYO, Nov 30 (Reuters) - The Nikkei average hit a
seven-month closing high on Friday as a weaker yen, driven by
persistent expectations the Bank of Japan will act more boldly
under a likely new government after a Dec. 16 election, lifted
the shares of exporters.
   The Nikkei has surged 9 percent while the yen has
weakened over the past two weeks after Shinzo Abe, leader of the
main opposition party, called for the central bank to set an
inflation target of 2 percent and embark on "unlimited easing"
to pull the economy out of its decade-long deflation.
    The rally produced a 5.8 percent rise in the benchmark
Nikkei this month, its best monthly performance since February.
    The Nikkei ended 0.5 percent higher to 9,446.01 on Friday
after trading as high as 9,492.91, or 1 percent up, earlier in
the session.
    According to Reuters data, the most traded December Nikkei
index options were a call with a strike price of 9,750
, 3.2 percent above Friday's close, followed by
another call at 10,000 and a put at 9,250
.
    But some players were less upbeat on the market, saying
domestic investors could turn into sellers when the Nikkei nears
the 9,500-mark.
    "Their positions are like this ... short on the yen and long
on the Nikkei," said Norihiro Fujito, a senior investment
strategist at Mitsubishi UFJ Securities. "Buying (in the
equities market) is mainly by foreign hedge funds such as
commodity trading advisors who are chasing the Nikkei 225
futures higher." 
    "Domestic players are becoming sellers because they take a
cold look at their political climate," he said.
    Another Tokyo-based analyst said: "It does feel like people
aren't that committed to take a big punt at the end of the
year."
    Exporters in demand included Canon Inc, Nikon Corp
, semiconductor equipment maker Tokyo Electron Ltd
 and Nissan Motor Co, up between 0.9 and 4.5
percent, as the yen was traded at 82.40 to the dollar, near a
7-1/2-month low of 82.84 yen reached on Nov. 22.
    Hitachi Ltd climbed 4.2 percent and Mitsubishi
Heavy Industries Ltd advanced 3 percent after they said
they would combine their thermal power businesses to better
compete against bigger overseas rivals Siemens AG and
General Electric Co.
    Adding to the upbeat sentiment on Friday, Japan's industrial
output unexpectedly rose in October in a sign the world's
third-largest economy may have seen the worst of the effects of
weak global trade and a diplomatic row with China.
 
    The broader Topix index gained 0.3 percent to
781.46, with 2.39 billion shares changing hands, up from
Thursday's 1.81 billion and last week's average of 1.95 billion.
    In terms of valuations, Japanese equities carry a 12-month
forward price-to-earnings ratio of 12, slightly cheaper than
U.S. S&P 500's 12.5 but more expensive than the
pan-European STOXX Europe 600's 11, data from Thomson
Reuters Datastream showed.