Nikkei climbs 1.4 pct to 8-month high after LDP win

Sun Dec 16, 2012 8:13pm EST

* 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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