Nikkei snaps 3-day losing streak after strong China data

Thu Jan 24, 2013 2:27am EST

* Nikkei up 1.3 pct, Topix gains 1.1 pct
    * Oct-Dec results in focus next week - analyst
    * China factory growth at 2-yr high supports market
    * Apple suppliers mostly recover after hit from iPhone sales

    By Ayai Tomisawa
    TOKYO, Jan 24 (Reuters) - Japan's Nikkei share average rose
on Thursday, snapping a three-day losing streak after strong
Chinese manufacturing data helped firms with high exposure to
the world's second-largest economy, while exporters gained
ground after the yen weakened.
    The Nikkei gained 1.3 percent to 10,620.87, climbing
back above the 10,600 level after hitting a three-week closing
low on Wednesday. The Nikkei is down 2.68 percent so far this
week, on track to snap a 10-week winning streak that was its
longest string of weekly gains since 1987.
    The market started with a soft tone on Thursday, weighed
down by Japanese suppliers to Apple Inc that fell on
disappointing iPhone sales figures. But most reversed their
losses after data showed that growth in China's factory sector
hit a two-year high in January.
    Komatsu Ltd, a construction equipment maker with a
heavy contribution to its sales from China, advanced 2.2 percent
and Hitachi Construction added 1.9 percent, while the
Nikkei China 50 subindex rose 1.4 percent.
    The China HSBC flash purchasing managers' index (PMI) rose
to 51.9 in January, the highest since January 2011 and above the
50-point level that shows accelerating growth in the sector from
the previous month. 
    "China helped, but basically three days of losses has
created a nice dip-buying opportunity. It's very easy to get in
there today," said Masato Futoi, head of cash equity trading at
Tokai Tokyo Securities.
    "The underlying tone is still bullish, so even bad news
about Apple or whatever doesn't hit stocks too hard."
    Exporters were in demand, with Toyota Motor Corp 
rising 2.2 percent, Honda Motor Co gaining 2.0 percent
and Panasonic Corp adding 1.2 percent.
    After coming under pressure in morning trade, Apple
suppliers Murata Manufacturing Co Ltd, Foster Electric
Co Ltd and Taiyo Yuden Co Ltd ended the
session with gains ranging from 0.4 percent to 4.2 percent.
However, Ibiden Co Ltd, which makes printed circuit
boards for the iPhone, slid 4.7 percent.  
    Apple said it had shipped 47.8 million iPhones in the
December quarter, below the roughly 50 million predicted by Wall
Street analysts, sending its shares skidding 10 percent in
extended trading as investors cut their exposure to the stock.
    
    EARNINGS IN FOCUS
    Quarterly earnings figures are beginning to trickle in, with
Japan's earnings reporting season moving into higher gear next
week.
    "It is widely expected that Oct-Dec results will be bad,"
said Yoshiyuki Kondo, an analyst at Daiwa Securities. "But the
outlook is good for the year ending in March and next year."
    Many exporters could end up exceeding their latest forecasts
for the year to March, which were based on conservative foreign
exchange rate assumptions, analysts said.
    "Some companies have assumptions that are 10 yen higher to
the dollar than current dollar-yen levels, so their earnings
prospects are good for the foreseeable future," Kondo said.
    On Thursday, the dollar rose 0.7 percent against the yen to
89.21 yen, pulling away from a one-week low of 88.06 yen
hit the previous day.
    Bellwether companies such as Toshiba Corp, Honda
Motor Co and Softbank Corp are scheduled to
report their third-quarter results next week.
    Yaskawa Electric Corp fell as much as 8.8 percent
to a one-month low before ending down 4.1 percent at 793 yen
after the company reported a 39 percent drop in operating profit
in the nine months to December, hurt by weak demand for servo
motors in China and Europe.
    Toshiba Corp gained 4.1 percent after it and
General Electric Co said they will enter a global
strategic alliance to develop and sell fossil-fuel power
equipment and consider a joint venture in the business.
 
    Many analysts remain bullish on the Japanese market,
including those at Goldman Sachs, who said in a report published
on Thursday that the Topix index could rise as high as 1,270, or
43 percent above its current level, if the yen weakened to
100-110 against the dollar.
    The broader Topix rose 1.1 percent to 897.62 in
relatively thin trade, with 3.27 billion shares changing hands,
compared with last week's average daily volume of 3.73 billion
shares.
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