Nikkei edges up to 7-month high ahead of U.S. jobs data
* Nikkei adds 0.2 pct, further into "overbought" territory * Topix up 0.3 pct in active trade * Sharp extends gains on short-covering By Dominic Lau TOKYO, Dec 7 (Reuters) - Japan's Nikkei share average rose to a seven-month high for the second day in a row on Friday, ahead of U.S. jobs data, as persistent speculation of further monetary easing by the central bank under a likely new government supported the market. The Nikkei gained 0.2 percent to 9,564.33, heading further into "overbought" territory, with its 14-day relative strength index at 71.2. A level of 70 or above is deemed overbought, which often signals a possible pullback in the near term. Kyoya Okazawa, head of global equities and commodity derivatives at BNP Paribas in Tokyo, said many foreign investors remained sceptical of the political promises to pull the world's third-largest economy out of reflation but were forced to go in to the market after recent surge. "They are sceptical about Japan changing, BOJ changing," he said. "Having said that, hedge fund clients are taking some positions in derivatives to protect upside risk of the Nikkei." As the Nikkei kept moving up from 9,000, sceptics started buying exporters, Okazawa said, adding that doubts remain but people have been "gradually forced to believe a Japan-is-changing kind of scenario." Led by exporters, the Nikkei has rallied 10.4 percent over the past 3-1/2 weeks as the yen has weakened after Shinzo Abe, the leader of the opposition party which is expected to win a Dec. 16 general election, called for the Bank of Japan to embark on "unlimited easing" and set an inflation target of 2 percent. Half of Japan's manufacturers say their top request for the winner of the election is a push to weaken the yen, which they see as critical to reviving the country's economy, a Reuters polls showed. The benchmark Nikkei is up 13.1 percent this year, slightly ahead of a 12.4 percent rise in the U.S. S&P 500 but behind a 14 percent gain in the pan-European STOXX Europe 600 index. U.S. PAYROLLS DATA Investors are waiting on November nonfarm payrolls data due at 1330 GMT to see how much superstorm Sandy disrupted U.S. economic activity. Economists in a Reuters survey forecast 93,000 jobs were created in the United States last month compared with 171,000 in October, while the unemployment rate is seen at 7.9 percent. "There is some data in the U.S. tonight, which means people don't want to put too much in new positions today," a senior dealer at a foreign brokerage said. "My flows are to the sell side ... It certainly seems to me that the market is still in an uptrend overall on the back of hopes of further yen weakening." Japan's broader Topix added 0.3 percent to 790.95 in active trade, with volume at 63 percent of its full daily average for the past 90 trading days. Automakers continued to head higher, with Nissan Motor Co , Toyota Motor Corp and Honda Motor Corp , up between 0.4 and 1.1 percent. Sharp Corp surged 10.6 percent to a three-month high, extending the previous session's 9.9 percent jump on short covering after a Taiwan newspaper quoted Hon Hai Precision Industry's chairman as saying that U.S. Qualcomm Inc's tie-up will not affect Hon Hai's talks with the struggling TV maker to become its biggest shareholder. Sharp said on Tuesday after the market close that chipmaker Qualcomm will invest as much as $120 million in Sharp, which will boost the firm's efforts to remain viable. Short-selling interest in Sharp has fallen lately, although it still remains high with 91.41 percent of its stock that is available to be borrowed out on loan as of Dec. 5, down from 93.46 percent on Nov. 30, according to data provider Markit. But some exporters succumbed to profit-taking as investors locked in recent gains. Nikon Corp, Hitachi Construction Machinery Co Ltd and auto parts maker Denso Corp slipped between 0.4 and 0.7 percent.
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