Nikkei closes at new 4-1/2 year high on BOJ hopes; but Topix low

Tue Mar 5, 2013 2:07am EST

* Nikkei rises 0.3 pct; Topix down 0.4 pct
    * Exporters, financial turn weak on profit-taking
    * Real estate drops weigh on Topix
    * Fast Retailing up on strong Uniqlo Japan sales

    By Ayai Tomisawa
    TOKYO, March 5 (Reuters) - The Nikkei average closed at its
highest level in 4-1/2 years on Tuesday as confirmation hearings
for Bank of Japan leadership nominees boosted expectations of
aggressive monetary easing, but gains were trimmed on
profit-taking in financials and exporters.
    Kikuo Iwata, a nominee for deputy governorship at the
central bank said that the BOJ must work to achieve its 2
percent inflation target within two years at the latest, a day
after Haruhiko Kuroda, the nominee for governor, outlined a
forceful policy to defeat deflation.
    The Nikkei advanced 0.3 percent to 11,683.45, its 
highest close since September 2008. At one point, it 
rose as high as 11,779.42, also its highest level since 
September 2008.
    "(Kuroda) is the absolutely perfect guy in there and
probably the best one for the stock market," said Nicholas
Smith, Japan strategist at CLSA.
    "This is absolutely not a yen story. This is about an asset
price reflation story, so don't concentrate your forces in
exporters, concentrate on ... banks, brokers and real estate,"
Smith said.
    The market was quick to price in the confirmation hearings,
and investors took profits on recently gained exporters,
financials and real estates.
    "The market is already convinced that there will be easing.
But it won't happen until April at earliest, so it's not
something new," said Fujio Ando, senior managing director at
Chibagin Securities.
    Index heavyweight Fast Retailing Co, however,
jumped 5.5 percent after its Uniqlo casual-clothing chain posted
a 9.6 percent year-on-year increase in same-store sales in Japan
last month.
    Sony Corp dropped 0.9 percent, Mitsubishi UFJ
Financial Group fell 0.8 percent and Sumitomo Mitsui
Financial Group declined 0.5 percent.
    The banking sector has rallied about 50 percent
since mid-November after Prime Minister Shinzo Abe called on the
BOJ to embark on bold monetary policy to whip deflation,
outpacing a 35 percent rise in the benchmark Nikkei during the
same period.
    Real estate stocks were weaker, with Mitsui Fudosan Co
 shedding 2.1 percent and Mitsubishi Estate Co 
also dropping 2.1 percent, dragging down the broader Topix
, which fell 0.4 percent to 988.62. 
    Volume was moderate, with 3.08 billion shares changing
hands. It compares to last week's average daily volume of 3.32
billion shares.
    
    CONCERN
    Hisamitsu Pharmaceutical Co Inc sank 5.2 percent
after a panel of advisers to the U.S. Food and Drug
Administration recommended that the agency reject a drug for hot
flashes associated with menopause made by Hisamitsu's subsidiary
Noven Pharmaceutical Inc.
    Some market players are worried that the latest strength in
Tokyo shares may not be justified given an uncertain global
economic outlook as the U.S. economy faces automatic spending
cuts and Europe struggles with Italian political crisis.
    "I think it's becoming a bit like an asset bubble. Retail
investors are looking to buy laggards everyday. Their moves
determine the direction of the stock market in the short term.
They don't care about fundamentals," said Yasuo Sakuma,
portfolio manager at Bayview Asset Management.