Nikkei likely to start 2013 higher after U.S. cliff averted

Thu Jan 3, 2013 6:36pm EST

TOKYO, Jan 4 (Reuters) - Japan's Nikkei share average is
expected to rise on its first trading day of 2013 and could test
a nearly two-year high as a deal in Washington to avert the
"fiscal cliff" buoys sentiment and a weaker yen is likely to
lift exporters.
    Market participants said the Nikkei was likely to trade
between 10,600 and 10,800 on Friday. The Nikkei closed up 0.7
percent at 10,395.18 on Dec. 28, the last trading day of 2012,
after touching its highest level since March 10, 2011, in
intraday trade.
    If the index touches the 10,800-mark, it will be the first
time since Feb. 21, 2011.
    Nikkei futures in Chicago closed at 10,765 on
Thursday, up 335 points from the Osaka close of 10,430
on the final trading day of 2012.
    "It's a relief that the U.S. fiscal cliff was averted," said
Hiroichi Nishi, general manager at SMBC Nikko Securities, adding
that the market would likely cheer positive developments that
happened while Japanese markets were closed for the New Year
holidays.
    "Exporters should benefit from a weaker yen on expectations
that they will have strong forecasts for the next fiscal year."
    On Wednesday, President Barack Obama signed "fiscal cliff"
legislation that raises tax rates for top earners and extends
tax cuts for the middle class.
    On Friday morning, the yen traded at 87.56 yen to the
dollar, its weakest since July 2010. A weaker yen inflates
exporters' overseas earnings when repatriated.
    Japanese shares gained 23 percent last year, their best
yearly gain since 2005, after rising expectations of aggressive
monetary stimulus under new Prime Minister Shinzo Abe weakened
the yen and bolstered exporters.
 
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