Nikkei climbs 2.8 pct to above 14,000, highest in nearly 5 years

Mon May 6, 2013 11:32pm EDT

* Nikkei rises 2.8 pct, Topix gains 2.6 pct
    * Exporters lead the market after strong U.S. jobs data
    * Rally's momentum might not last - broker

    By Tomo Uetake
    TOKYO, May 7 (Reuters) - The Nikkei average jumped 2.8
percent on Tuesday to break above 14,000 for the first time
since June 2008 as the market played catch-up from an extended
holiday, with last week's strong U.S. jobs data easing concerns
over the health of Japan's major export market.
    The Nikkei was up 389.22 points at 14,083.26 by the
midday break after closing for public holidays on Friday and
Monday. Tuesday's rally took the benchmark above 13,988, the
61.8 percent retracement of its slide from February 2007 to
October 2008.
    A senior dealer at a foreign bank said their buy orders
outpaced sell by 2-1/2 times.
    "We picked up a very decent size buy programme out of the
domestic accounts," he said. "I think smart money domestic
(investors) are sellers at around 15,000. They are not going to
sell here. The market can keep going."
    But he added Japanese corporate earnings "are a little bit
crappy ... people are just a little bit disappointed." Of the 65
Nikkei companies that have reported quarterly earnings so far,
54 percent of them either beat or met market expectations,
according to Thomson Reuters StarMine. 
    A stronger-than-expected U.S. nonfarm payrolls for April,
with 165,000 jobs being added and the unemployment rate falling
to 7.5 percent, the lowest since December 2008, provided much
needed relief to investors rattled by a series of soft data in
recent weeks.
    The United States is Japan's biggest export market, followed
closely by China. A run of soft data from China was also a
factor in the recent selloff in commodities and other riskier
markets. 
    Japanese exporters led the rally, with Toyota Motor Corp
, Sony Corp, semiconductor equipment maker
Tokyo Electron Ltd and Suzuki Motor Corp up
between 4.5 and 6 percent.
    Sony was the most traded stock on the main board by
turnover, while Toyota took third spot. 
    
    YEN WEAK 
    The sector was also helped by renewed weakness in the yen
, which fell as low as 99.46 on Monday on the back of the
upbeat U.S. jobs data last Friday. The yen last traded at 98.99
yen to the dollar.
    The Japanese currency has weakened 22 percent against the
dollar since mid-November while the Nikkei has jumped 63 percent
after Prime Minister Shinzo Abe began promising to revive the
economy with expansionary monetary and fiscal policies, dubbed
as "Abenomics", during his election campaign.
    The yen's declines gathered fresh momentum after the Bank of
Japan's April 4 announcement of a radical monetary expansion
campaign to end two decades of stagnation.
    The broader Topix index advanced 2.6 percent to
1,183.60, with volume at 49 percent of its full daily average of
the past 90 trading days.
    Stefan Worrall, director of equity cash sales at Credit
Suisse, said Tuesday's rally mirrored the trend in overseas
markets in the last few days while Japan was on holiday and may
not last the rest of the week.
    "The question is 'where to now?'," Worrall said. "We still
have the majority of corporate earnings to come through in the
next two weeks."
    JPMorgan said it expected the Nikkei to trade around 14,150
based on the correlation between the yen/won exchange
rate and Tokyo index. The yen hit a more than five-year low of
11.0057 won on Tuesday.   
    "According to regression analysis, the sensitivity in the
Nikkei against JPY/KRW movements strengthened since mid-March,"
it said in a note.
    "While Japan's stock market was closed last Friday and
Monday, the current JPY/KRW level suggests the Nikkei index
should be 14,150."
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