Nikkei set to test 8-month high as yen weakens

Wed Dec 12, 2012 6:08pm EST

TOKYO, Dec 13 (Reuters) - Japan's Nikkei average is expected
to open higher and test 9,700 on Thursday, a level not seen
since early April, as the yen hit a 8-1/2-month low versus the
dollar on expectations the Bank of Japan will implement more
aggressive monetary easing. 
    The Nikkei is likely to trade between 9,600 and
9,750, strategists said, while Nikkei futures in Chicago closed at 9,670 on Wednesday, up 0.9 percent from the
Osaka close of 9,580.
    "The yen depreciation is a big factor for the Japanese
equities market," said Takashi Hiroki, chief strategist at Monex
Inc. "The Japanese market will chase the upside. The Nikkei will
likely rise to 9,700."
    The Japanese currency was quoted at 83.19 yen to the dollar
on Thursday, after touching a 8-1/2-month low of 83.31 on
Wednesday after the U.S. Federal Reserve said it would extend
its bond-buying economic stimulus programme as investors bet on
bolder move of its own from the Bank of Japan after Sunday's
general election.
    Shinzo Abe, the leader of the main opposition party which is
expected to win the election, has called for the central bank to
adopt extreme policy action, including setting an inflation
target of 2 percent and embarking on "unlimited easing".
    On Wednesday, the Nikkei rose 0.6 percent to 9,581.46 to a
near eight-month closing high, while the broader Topix 
index climbed 0.7 percent to 791.29.
    So far this year, the Topix has handed investors a total
return of 10.4 percent in local currency after losing 17 percent
in 2011, according to Thomson Reuters Datastream.
    The Topix carries a 12-month forward price-to-earnings ratio
of 12.1, cheaper than the U.S. S&P 500's 12.6 but more
expensive than the pan-European STOXX Europe 600's 
11.3, data from Datastream showed.
    
> Wall St ends almost flat, Bernanke warns on 'fiscal cliff' 
> Euro gains on steady U.S. rates, Fed bond buying plan    
> Treasuries drop, Fed announces new bond-buying programme 
> Gold rises after Fed makes surprises low-rate pledge    
> Oil up on more Fed stimulus, OPEC holds output target    
    
    STOCKS TO WATCH
    --MITSUBISHI UFJ FINANCIAL GROUP 
    Mitsubishi UFJ Financial Group is set to buy Bank of America
Corp's stake in their Japanese private banking venture
for 39 billion yen ($470.3 million), Bloomberg reported, quoting
two people with knowledge of the matter. 
    Separately, Bank of Tokyo-Mitsubishi UFJ, a unit of
Mitsubishi UFJ Financial Group, plans to buy a 20 percent
interest in VietinBank from the Vietnamese government
for about 60 billion yen ($725 million), the Nikkei reported.
 
    --TOYOTA MOTOR CORP 
    Toyota will alert about 700,000 owners of three Lexus models
built over the last several years of a problem with the
emergency trunk release, Consumer Reports magazine said on
Wednesday. 
    --HONDA MOTOR CO 
    Honda will recall 871,000 vehicles that could roll away
after the ignition key has been removed, including 807,000 in
the United States, the company said on Wednesday.
 
    --MITSUBISHI HEAVY INDUSTRIES 
    United Technologies Corp, the world's largest maker
of elevators and air conditioners, said it will sell the power
systems business of its aircraft engine unit, Pratt & Whitney,
to Mitsubishi Heavy Industries. 
    --CYBERAGENT INC, YAHOO JAPAN CORP 
    Yahoo Japan said on Wednesday that it will buy internet
advertising firm CyberAgent's foreign exchange operations arm
for 21 billion yen ($254 million).