Nikkei at 4-1/2-yr high on U.S. data, weak yen; financials lead

Sun Mar 10, 2013 11:48pm EDT

* Sumitomo Mitsui jumps after saying to repay bailout funds
    * Shiseido surges on reports that president to leave
    * Automakers boosted by Citi target price hike - analyst

    By Tomo Uetake
    TOKYO, March 11 (Reuters) - The Nikkei share average hit a
4-1/2-year high on Monday morning as signs of recovery in the
U.S. economy boosted investor sentiment and a weaker yen fuelled
gains in financials and exporters.
    The Nikkei rose 0.9 percent to 12,396.55, a level
not seen since just before the collapse of Lehman Brothers
roiled global markets in September 2008. The Topix 
surged 2.2 percent to 1,042.41, its highest level since October
2008.
    The broader market's gains were underpinned by the yen
slumping to more than 96 per dollar, its weakest since August
2009, after a strong U.S. jobs report on Friday. 
    "While last week the Nikkei's gains were driven by Fast
Retailing, today the broader Topix jumped after things turned
out to be the best possible scenario over the weekend," said
Naoki Fujiwara, chief fund manager at Shinkin Asset Management.
    Last week, the Nikkei marked its biggest weekly gain since
December 2011, helped by index heavyweight Fast Retailing's
 gain of 24 percent. On Monday morning, the stock
dropped 1.6 percent.
    Signs of a recovery in the U.S. labour market bolstered
sentiment among investors in Japanese stocks, which are already
riding a bullish streak on expectations of aggressive easing by
the Bank of Japan under governor nominee Haruhiko Kuroda.
    "This time, the yen weakened not because of Japan but
because of the United States, or the recovery in the U.S.
economy. It's not something that foreign countries can criticise
Japan for," said Fujiwara.
    Financials led the sectoral gainers. The securities
sub-index jumped 5.4 percent, while the banking and
real estate sectors advanced 5 percent and 4.9 percent
respectively. 
    Sumitomo Mitsui Trust Holdings Inc shot up 5.4
percent to a 4-1/2-year high after the bank said it would repay
200 billion yen ($2.1 billion) in public bailout money, ending
more than a decade of partial government ownership.
 
    Mizuho Financial Group Inc and Mitsubishi UFJ
Financial Group Inc gained 4.4 and 5.6 percent
respectively in heavy trade as the softer yen and government's
reflationary policies were expected to stimulate demand for
loans, traders said.
    "On a dollar basis, Japan is now significantly
outperforming, and from that perspective it's reflecting the
real recovery signs emerging globally for Japanese exports that
go beyond the weaker yen," said Stefan Worrall, director of cash
equities at Credit Suisse.
    Honda Motor Co Ltd, Nissan Motor Co Ltd 
and Yamaha Motor got an extra boost from Citi target
price hikes, according to an analyst, rising between 2.9 and 4.7
percent. 
    Sharp Corp was out of favour, however, falling 2.5
percent after the Asahi newspaper said Hon Hai Precision
Industry Co Ltd would not invest in the troubled
electronics maker before a March 26 deadline. 
    Shiseido Co Ltd jumped 6.1 percent on media reports
the president of Japan's largest cosmetics company will end an
underwhelming reign that saw profits drop dramatically, with the
current chairman taking his place.
    Gains in exporters, banks and real estate have largely led
the Nikkei's 42 percent rally since mid-November, when Prime
Minister Shinzo Abe stepped up the calls for aggressive monetary
and fiscal policy that saw his party sweep to power in December.
    And while a softer yen has improved the fundamentals for
Japanese companies, some wonder if the sharp gains have made
stocks overpriced.
    "The Topix's 12-month forward price-to-earnings ratio is now
13.3, which implies that investors are pricing in a 50 to 60
percent increase in profits for companies, based on the weaker
yen," said Masayuki Doshida, a senior market analyst at Rakuten
Securities.
    "That means Japanese shares are no longer looking so cheap
compared to U.S. or German stocks, which may blunt the rally,"
he said.