Nikkei climbs 1.4 pct to 8-month high after LDP win
* Nikkei rises 1.4 pct; Topix up 0.9 pct in active trade * Exporters in demand as yen hits 20-month low vs dollar * Real estates, banks up on expectations of reflationary policy By Dominic Lau TOKYO, Dec 17 (Reuters) - Japan's Nikkei average climbed 1.4 percent to an eight-month high on Monday, as the yen weakened after the conservative Liberal Democratic Party, which favours aggressive monetary easing, won Sunday's election by a landslide. The Nikkei rose 132.77 points to 9,870.33 in mid-morning trade, while the yen hit a 20-month low of 84.48 yen to the dollar, boosting the appeal of exporters' shares. A weaker yen helps boost Japanese exporters' overseas earnings when repatriated and increases their competitiveness. Exporters finding higher ground included Honda Motor Co , Sony Corp, Daikin Industries Ltd and industrial robot maker Fanuc Corp, up between 1.1 and 4.1 percent. The landslide victory gives the LDP and its ally the New Komeito party a two-third majority needed to overrule parliament's upper house in most matters, allowing the new government a freer hand to implement its policy. "The Nikkei has a chance to reach 10,000 in the short-term. However, I am a little bit worried about the BOJ (Bank of Japan) meeting on the 20th," said Ryota Sakagami, chief strategist at SMBC Nikko Securities. He said if the central bank disappointed with no additional monetary easing policy on Thursday, investors were likely to take profits on the past month's rally. The benchmark Nikkei has risen 14 percent during that time, spurred by yen weakness after Shinzo Abe, the leader of the LDP, called for the BOJ to undertake "unlimited easing" and set an inflation target of 2 percent. The rally has taken the year-to-date gain for the Nikkei to 16.8 percent, ahead of a 12.4 percent rise in the U.S. S&P 500 and a 14.3 percent gain in the pan-European STOXX Europe 600 index. Monday's gain took the index further into "overbought" territory, with its 14-day relative strength index at 79.3, way above the 70-level which is deemed as overbought and often signals a possible near-term pull back. Shares of financial and property firms, which tend to benefit the most in a reflationary situation, also gained. The real estate sector gained 2.6 percent, while Nomura Holdings Inc, Japan's top brokerage, rose 2.2 percent and lender Mitsubishi UFJ Financial Group added 1.6 percent. The broader Topix index advanced 0.9 percent to 808.51 in active trade, with volume at 50 percent of its full daily average for the past 90 trading days. Struggling TV maker Sharp Corp surged 3.4 percent to extend this month's rally to 61.6 percent on short-covering after it said in early December that U.S. chipmaker Qualcomm Inc would invest $120 million. It was the most traded stock on the main board by turnover. Short-selling interest in Sharp has fallen lately, although it still remains high, with 91.21 percent of its stock that is available to be borrowed out on loan as of Dec. 13, down from 92.92 percent on Dec. 7, according to data provider Markit.
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