Nikkei soars to 4-1/2-yr high; Kuroda seen likely next BOJ governor

Sun Feb 24, 2013 10:26pm EST

* Nikkei rises 2 pct, Topix gains 1.7 pct as yen slumps
    * Economically sensitive stocks, finanicals lead the gains
    * Sharp Corp falls on Hon Hai capital doubt

    By Tomo Uetake
    TOKYO, Feb 25 (Reuters) - The Nikkei average soared 2
percent to a 53-month high on Monday as the yen sank after
sources said Japan is likely to nominate Asian Development Bank
President Haruhiko Kuroda, an advocate of aggressive monetary
easing, as its next central bank governor.
    Economically sensitive stocks led the gain after the yen
 hit a 33-month low of 94.77 yen to the dollar on Monday,
while financials and real estate companies also advanced as they
stood to benefit from reflationary policy.
    By the midday break, the Nikkei climbed 221.76
points to 11,607.70 after briefly hitting 11,618.53, its highest
level since late September 2008.
    "Earlier this month, the market priced in the possibility of
(Toshiro) Muto, who is seen less aggressive, as the most
probable candidate," said Kyoya Okazawa, head of global equities
and commodity derivatives at BNP Paribas in Tokyo.
    "This has capped the gains to some extent. (But) as Kuroda
emerged as the frontrunner to win the government nomination,
investors are chasing the market higher today."
    Sources told Reuters on Monday that the government is likely
to nominate Kuroda as its next central bank governor.
    Prime Minister Shinzo Abe is also seen filling one of two
deputy governor posts with Kikuo Iwata, an academic critical of
Bank of Japan policy and an advocate of unorthodox monetary
easing steps, the Nikkei newspaper reported. 
    "Kuroda has been his top pick for a long time. Abe seems to
have gained confidence during his U.S. visit. That made him go
ahead with his original plan," BNP Paribas' Okazawa said.
    "If the report is right, it means Abe has won, the BOJ has
lost and for the Ministry of Finance, it's a draw. There will no
longer be any resistance or opposition to Abenomics," Okazawa
added. "For the markets, it means the yen is likely to fall.
It's also positive for Japanese equities." 
    The benchmark Nikkei has rallied nearly 34 percent since
mid-November, driven by a weaker yen as Abe pursued bold fiscal
expansionary and monetary easing polices aimed at reigniting the
economy. 
    
    SHIPPERS, FINANCIALS HIGHER
    Sea transport sub-index rose 5.6 percent as the
best sectoral gainer on the main board, with Kawasaki Kisen
Kaisha Ltd jumping 9.3 percent, Mitsui OSK Lines Ltd
 gaining 4.6 percent and Nippon Yusen KK 
advancing 4.1 percent. A sector upgrade from Morgan Stanley MUFG
also boosted the stocks.
    Lender Mizuho Financial Group and Mitsubishi UFJ
Financial Group rose 2.5 percent each and were the top
most and the second most traded stock, respectively, while real
estate company Mitsui Fudosan climbed 5 percent.
    Boosted by the yen's sharp fall, Japanese companies'
earnings outlook has improved sharply. Their one-month earnings
momentum -- analysts' earnings upgrades minus downgrades as a
total of estimates -- rose to 8 percent from 3.6 percent in
January, data from Thomson Reuters I/B/E/S showed.
    In contrast, earnings momentum for U.S. companies remained
in negative territory in February, while that for European firms
deteriorated further. 
    The broader Topix rose 1.7 percent to 980.05, with
volume at 65 percent of its full daily average for the past 90
trading sessions.
    Other notable gainers included Kobe Steel Ltd, up
5.8 percent after the steelmaker said on Friday evening it was
bidding for a contract to build a $1.1 billion city gas-fired
power plant by 2021 to supply electricity to Tokyo Electric
Power Co.. 
    Sharp Corp was one of the 10 losers on the Nikkei,
down 6.5 percent after sources said the consumer electronics
maker was unlikely to include a capital infusion from Taiwan's
Hon Hai Precision Industry Co Ltd in its turnaround
plan as talks between the firms have hit a snag.