Nikkei edges up as all eyes on BOJ meeting
* Investors timid ahead of BOJ announcement * Sony still in focus on new tablet news * Olympus up, takes step to remove TSE warning By Sophie Knight TOKYO, Jan 22 (Reuters) - The Nikkei share average crept higher before the end of a Bank of Japan policy meeting on Tuesday which is expected to set a 2 percent inflation target and introduce more aggressive easing steps to boost growth. The central bank is widely expected to double its current inflation target, bump up its asset purchases budget and discuss scrapping the interest it pays on banks' reserves, according to sources. The Nikkei edged up 0.4 percent to 10,795.12 by mid-morning, with investors unwilling to play their hands before the BOJ announcement. "Everyone expects the 2 percent inflation target but that won't suffice," said Hisao Matsuura, an equity strategist at Nomura Securities. "I think the market will drop no matter what they say, but expectations are very mixed. It really depends what (the BOJ) decides to do," Matsuura added. Investors have been girding for the BOJ's decision since then-incoming Prime Minister Shinzo Abe began calling for aggressive easing in mid-November, helping to weaken the yen, which boosted exporters and sparked a 26 percent rally in the Nikkei. Some think the market has become overbought as a result, with the BOJ meeting a ripe opportunity for a correction. The Nikkei's up-down ratio, or the 25-day moving average of gainers divided by the 25-day average of losers, stood at 146.85, well above the 120-mark that signals an overheated market. "I think the yen's weakening is pretty much over which means the Nikkei's run is also over," said Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities. The yen was still off its 2-1/2 year low against the dollar hit on Monday morning, trading at 89.71 on Tuesday. However, Nakanishi said the market would remain firm, albeit with a different focus. "Exporters are oversold and attention is now going to switch to domestic companies as the supplementary budget is discussed in the Diet, which opens again on Jan. 28," he added. On Monday morning Sony Corp remained in focus, gaining as much as 3.3 percent on the back of a report in the Nikkei business daily that it would launch a new version of its Xperia tablet in Japan this spring after halting sales last year due to faults. Sony topped the main board as the most-traded stock by turnover for a third day after news on Friday that its U.S. subsidiary would sell its New York headquarters' building, with $685 million of the sale to be recorded as operating income. Olympus Corp shot up 6.1 percent after UBS Securities started its coverage with a 'buy' rating and a target price of 3,000 yen, against Monday's close of 1,862 yen. The company on Monday submitted to the Tokyo Stock Exchange a written affirmation on the internal control system as stipulated in the securities listing regulations, which, if approved, will see the camera maker's "securities on alert" status lifted. The broader Topix gained 0.1 percent to 906.50 by mid-morning.
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