Nikkei edges higher, aided by weak yen, China data

Sun Dec 2, 2012 8:01pm EST

* Nikkei up 0.2 pct, Topix adds 0.1 pct
    * China Oct PMI rises to 7-month high

    By Dominic Lau
    TOKYO, Dec 3 (Reuters) - Japan's Nikkei average inched up on
Monday, extending gains from a seven-month closing high in the
previous session, as a weaker yen and improved Chinese
manufacturing data supported sentiment.
    The Nikkei added 0.2 percent to 9,464.50 after
gaining 5.8 percent in November to log its best monthly
performance since February.
    The benchmark has rallied 9.2 percent, led by exporters,
while the yen has fallen over the past 2-1/2 weeks on
speculation the Bank of Japan will be pushed to adopt aggressive
policy action after a Dec. 16 national election.
    Leader of the main opposition Liberal Democratic Party,
Shinzo Abe, has been calling for the Bank of Japan to take
bolder actions, including setting a 2 percent inflation target
and embarking on "unlimited easing". The LDP is expected to win
the most seats and form government after the election.
    "I don't believe what all Abe says, but at least the new
government will push the BOJ to ease monetary conditions," Ryota
Sakagami, chief strategist at SMBC Nikko Securities said.
    "My understanding of the current market move is mainly due
to the catch up of high-beta exporting companies due to the
global economic trend ... This process of catch up will continue
until the Nikkei hit 10,000." 
    Some exporters remained in demand with Canon Inc,
Ricoh Co Ltd and Suzuki Motor Corp up between
0.4 and 0.9 percent.
    Toyota Motor Corp was down 0.7 percent, although it
is still up nearly 15 percent in the past 2-1/2 weeks, while
Honda Motor Co slipped 0.3 percent.
    The currency was traded at 82.37 yen to the dollar on Monday
after falling as low as 82.75 yen on Friday, near its
7-1/2-month low of 82.84 touched on Nov. 22.
    A rise in China's official manufacturing purchasing
managers' index to a seven-month high of 50.6 in November from
50.2 in October also lent support to the Japanese market as
China is the country's top export market. 
    Construction machinery makers Komatsu Ltd and
Hitachi Construction Machinery Co Ltd, which have
significant exposure in China, advanced 0.6 and 1.5 percent,
respectively.
    The broader Topix put on 0.1 percent to 782.48.
    Japanese equities carry a 12-month forward price-to-book
ratio of 0.9, much cheaper than the U.S. S&P 500's 1.9
and the pan-European STOXX Europe 600's 1.4, data from
Thomson Reuters Datastream showed.
    The benchmark Nikkei is up 11.9 percent this year, slightly
behind a 12.6 percent rise in the S&P 500 and a 12.8 percent
gain in the STOXX Europe 600.