Nikkei rises on exporters and financials, "fiscal cliff" in focus

Thu Dec 20, 2012 8:09pm EST

* Nikkei, Topix both up 1.0 pct
    * Exporters, financials lead gains

    By Ayai Tomisawa
    TOKYO, Dec 21 (Reuters) - Japan's Nikkei share average rose
to a 8-1/2 month high on Friday after Wall Street stocks climbed
on hopes of progress in U.S. fiscal talks, while exporters
gained from a weaker yen.
     Analysts said the market is upbeat on the weak yen, but
most of the gains could be seen in early trade with some
profit-taking expected in the afternoon before a long weekend
with  Japanese financial markets closed on Monday for a national
holiday.
     The Nikkei gained 1.0 percent to 10,142.96 after
rising to as high as 10,175.06 earlier, and if it touches the
10,200-mark, it will be the first time since March 27.
    "The Nikkei will probably stay strong for the rest of the
year," said Takuya Takahashi, a strategist at Daiwa Securities.
"Foreign investors likely have gone on Christmas holidays, so if
they wanted to take profits, they would have done that by now.
Even if there is a correction after today, it shouldn't be that
big."
    After rising 17.1 percent over the last five weeks, the
Nikkei is deep in "overbought" territory, with its 14-day
relative strength index at 77.96, well above 70 which is deemed
overbought and signalling that a correction may be imminent.
    Exporters were in demand, with Toyota Motor Corp 
adding 1.2 percent, Honda Motor Co rising 1.7 percent
and Canon Inc gaining 0.9 percent.
    The yen stayed under pressure after the Bank of Japan
expanded its asset-buying programme by an expected 10 trillion
yen and signalled more action ahead including setting a higher
inflation target.
    The dollar was at 84.36 yen, still within easy reach
of a 20-month peak around 84.62 set earlier in the week. A weak
yen inflates exporters' overseas earnings when repatriated.
    Yutaka Miura, a senior technical analyst at Mizuho
Securities, said that exporters and financials are likely to
remain investors' hot pick stocks on persistent hopes for
reflationary policies from incoming premier Shinzo Abe's .
    In the meantime, other market observers said talks to avoid
the so-called fiscal cliff of government spending cuts and tax
hikes in the United States remained a key risk for markets in
the closing days of the year.
    In the United States, Republican House Speaker John Boehner
said he would keep working on a solution to the fiscal cliff
while also slamming President Barack Obama's approach to the
budget talks.
    Financials outperformed, with Nomura Holdings 
soaring 4.4 percent, Mitsubishi UFJ Financial Group 
rising 1.8 percent and Sumitomo Mitsui Financial Group 
advancing 1.5 percent.
    The broader Topix added 1.0 percent to 847.22.
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