Nikkei climbs above 9,700 for first time in 8 months

Wed Dec 12, 2012 8:24pm EST

* Nikkei rises 1.1 pct; Topix up 0.9 pct
    * Yen touches 8-1/2-month low vs dollar, buoys exporters

    By Dominic Lau
    TOKYO, Dec 13 (Reuters) - Japan's Nikkei average climbed
above 9,700 on Thursday for the first time since early April as
exporters were buoyed by a weaker yen on mounting expectations
the Bank of Japan will implement more aggressive monetary
easing.
    The Nikkei was up 1.1 percent at 9,699.13 in
midmorning, after trading as high as 9,706.84.
    The gain on Thursday took the benchmark deeper into
"overbought" territory, with its 14-day relative strength index
at 74.6. Seventy or above is considered overbought and often
signals a possible near-term pullback.
    Shoichiro Yamauchi, a technical analyst at Nomura
Securities, said the Nikkei would test 9,800 despite the
technical signals.
    "We think the yen depreciation will continue," he said,
adding that he expected the Nikkei to rise to 10,250 by February
or March.
    Exporters were in demand, with Toyota Motor Corp,
Honda Motor Co, Canon Inc, TDK Corp 
and Panasonic Corp up between 1 percent and 6.1
percent. A softer yen increases exporters' overseas earnings
when repatriated, and boosts their competitiveness.
    The broader Topix index advanced 0.9 percent to
798.35.
    The yen hit an 8-1/2-month low of 83.43 yen to the dollar on
Thursday as investors bet on bolder moves by the BOJ after a
general election on Sunday.
    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".
    His comments have weakened the yen over the past month,
while the Nikkei has rallied 11.8 percent, taking its
year-to-date gain to 14.6 percent and narrowing the gap with the
performance of its peers in the United States and Europe.
    The S&P 500 has risen 13.6 percent so far this year
and the pan-European STOXX Europe 600 has gained 14.8
percent.
    Still, Japanese equities are slightly cheaper than their
U.S. peers, with a 12-month forward price-to-earnings ratio of
12.1 versus the S&P 500's 12.6, data from Thomson Reuters
Datastream showed.
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