Nikkei touches 8-month high above 9,700, exporters rise

Wed Dec 12, 2012 10:04pm EST

* Nikkei rises 1.6 pct; Topix up 1.2 pct in active trade
    * Yen touches 8-1/2-month low vs dollar, buoys exporters
    * Banks in demand after lagging in the past month's rally

    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 rose 1.6 percent to 9,733.73 by the
midday break, after trading as high as 9,741.24.
    The gain on Thursday took the benchmark deeper into
"overbought" territory, with its 14-day relative strength index
at 76. 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 was likely headed higher 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 Sony Corp up between 1.3 percent and 4.9 percent. A
softer yen boosts the competitiveness of exporters and increases
their overseas earnings when repatriated.
    The yen hit an 8-1/2-month low of 83.44 yen to the dollar on
Thursday as investors bet on bolder moves by the central bank
after Japan's general election on Sunday.
    Shinzo Abe, the leader of the main opposition party which is
expected to win the election, has called for the 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 and helped boost stocks.
    
    CATCH-UP RALLY
    Banks also rose on Thursday as investors looked
for sectors which have lagged in the rally over the past month.
    "They have not moved in line with the yen move. They should.
Brokers already did. Nomura is up like 40 percent since
September, but the banks were left behind," a sales trader said.
    Sumitomo Mitsui Financial Group climbed 2.7
percent, Mitsubisihi UFJ Financial Group advanced 1.9
percent and Mizuho Financial Group gained 1.5 percent.
Nomura Holdings, Japan's top brokerage, rose 3.1
percent.
    Panasonic Corp surged 7.2 percent to a 1-1/2-month
high and was the most traded stock on the main board by turnover
after Barclays Securities raised its ratings on the consumer
electronics maker to 'overweight' from 'equal-weight', saying
the stock price appeared to have hit bottom.
    The broader Topix index was up 1.2 percent at 800.62
in active trade, with volume at 83 percent of its full daily
average for the past 90 trading days.
    Foreign investors remained net buyers of Japanese equities
last week for a fourth straight week. They bought a net 116.5
billion yen ($1.40 billion) of shares in the week through Dec. 1
after purchasing a net 184.3 billion yen in the previous week,
data from Japan's Ministry of Finance showed. 
    The Nikkei has rallied 12.3 percent over the past month,
taking its year-to-date gain to 15.1 percent, ahead of the
performance of its peers in the United States and Europe.
    The U.S. 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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