Nikkei hits 32-month high on weak yen; Sharp down on Apple report

Mon Jan 14, 2013 10:40pm EST

* Nikkei rises 1.3 pct, Topix up 1.2 pct
    * Sharp down 2.4 pct at midday due to report of Apple cuts
    * Exporters, economy-sensitive stocks strong

    By Tomo Uetake
    TOKYO, Jan 15 (Reuters) - Japan's Nikkei share average
climbed 1.3 percent to a 32-month high on Tuesday, driving the
benchmark further into "overbought" territory, as persistent
weakness in the yen boosts demand for exporters' shares.
    By the midday break, the Nikkei rose 136.05 points
to 10,937.62, setting its sights on the 11,000-mark, a level not
seen since late April 2010. It rose 1.1 percent last week to log
its ninth straight week of gains and its longest such winning
run since 1988. Monday was a public holiday in Japan.
    "It's because the yen weakened further against dollar over
the weekend. We expect the current trend to continue until the
Nikkei reaches 11,000 and the yen hits 90. Once it gets there,
Tokyo stocks are likely to move in a boxed range," said Naoki
Fujiwara, a fund manager at Shinkin Asset Management.
    Tuesday's rally took the benchmark Nikkei's 14-day relative
strength index at 80.4, way above the 70-mark which is deemed
overbought and often signals a near-term correction. 
    "Short-term correction is getting more likely given that
bullish sentiment ... has become more widespread. In terms of my
positioning, I have trimmed down the exposure to stocks which
have skyrocketed in the past two months," said Yasuo Sakuma,
portfolio manager at Bayview Asset Management.
    The Nikkei has rallied more than 26 percent over the past
two months, spurred by the weakness in the yen after Japan's new
leader Shinzo Abe called on the Bank of Japan to adopt
aggressive policies to energise the ailing economy, including
setting an inflation target of 2 percent.
    Exporters led the index higher on Tuesday, including Suzuki
Motor Corp, Panasonic, Daikin Industries Ltd
, Olympus Corp and auto parts maker Denso Corp
, which were up between 3 and 9.3 percent.
    Japanese automakers are aiming to shake off the lingering
effects of 2011's earthquake and tsunami, and capitalise on the
weakening yen and new products to increase sales in the United
States, after a robust 2012.    
    The yen was quoted at 88.80 to the dollar on Tuesday
after falling 0.4 percent to a 2-1/2-year low of 89.67 yen in
the previous session. The Japanese currency was traded at
118.785 to the euro.    
    As global risk sentiment improved, investors bought
growth-sensitive stocks. The sea transport sub-index 
rose 4.7 percent, making it the best sectoral performer, and the
mining sub-index was up 2.6 percent. 
    Stocks expected to benefit from Abe's reflationary policies 
continued to be in demand. The real-estate sub-index 
rose 2.5 percent.
    
    APPLE SUPPLIERS WEAKER
    Sharp Corp, however, sagged as much as 7 percent
after the Nikkei newspaper said on Monday that Apple Inc
 has slashed orders with suppliers of LCD panels for the
iPhone 5 in the current quarter due to weak demand.
    Other Apple suppliers in Japan also came under pressure,
with Murata Manufacturing Co Ltd down 1.9 percent and
Foster Electric Co Ltd off 1.9 percent.
    The broader Topix gained 1.2 percent to 909.42 in
active trade in the morning session, with volume at its full
daily average for the past 90 trading days.
    Japanese equities carry a 12-month forward price-to-earnings
ratio of 13, compared with the  U.S. S&P 500's 12.9 and
the pan-European STOXX Europe 600's 11.4, data from
Thomson Reuters Datastream showed.