Nikkei hits 5-1/2 year high as yen decline accelerates, exporters climb

Thu May 9, 2013 11:05pm EDT

* Nikkei on track to post biggest weekly gain since Dec 2009
    * Nikkei 15,000 in sight next week - broker

    By Ayai Tomisawa
    TOKYO, May 10 (Reuters) - The Nikkei share average surged to
a 5-1/2 year high on Friday as the U.S. dollar broke above the
elusive 100-yen mark and extended its gains, with exporters
leading the charge as the Japanese currency's new lows looks set
to further boost corporate earnings.
    The market is up 6.5 percent so far this week, on track for
its biggest weekly gain since December 2009.
    "There is strong demand for currency-sensitive exporters
today... even stronger than recent days," said a fund manager at
a U.S. asset management firm. 
    "Short-term investors are the main buyers, while long-term
investors have yet to catch up with the steep rises recently.
When they start buying aggressively, these exporters will likely
rise further."
     The Nikkei jumped 2.8 percent to 14,581.95 by the
midday break after hitting 14,630.47, the highest since January
2008 and surpassed the Nikkei 225 May options' settlement price
at 14,601.95.
    Exporters took the spotlight, with Toyota Motor Corp
 rising 4.3 percent, Honda Motor Co advancing
2.7 percent and Komatsu Ltd gaining 4.4 percent.
    The Topix gained 2.2 percent to 1,207.41.
    
    WEAK YEN TREND SUGGESTS MORE UPSIDE IN STOCKS
    During Asian trade, the yen fell to as low as 101.20 per
dollar, the lowest level in over four and a half years.
    The market was already upbeat after the dollar punched
through 100 yen on Thursday, helped by data showing U.S. claims
for unemployment benefits fell to the lowest level since January
2008.
    The yen's break below the key level was also underscored
with data showing Japanese investors finally reversed their
relentless net selling of foreign bonds.
    Japanese investors bought 309.9 billion yen ($3.1 billion)
in foreign bonds in the week through May 4 after purchasing
204.4 billion yen in the prior week, according to the Ministry
of Finance.
    "We've started seeing a new outlook for the Japanese
market," said Kyoya Okazawa, head of global equities at BNP
Paribas, adding that the yen's weakness has increased the
likelihood of the Nikkei touching 15,000 as soon as next week.
    "Investors, who once snapped up asset-related shares, are
selling them to buy more exporters, and more and more long-only
investors will buy exporters," Okazawa said.
    With the earnings season in full swing and companies
reporting strong results for the year ended March 2013, many of
the blue chip companies have surprised investors with overly
conservative forecasts for the current fiscal year. The likes of
Toyota and Sony Corp based their foreign exchange
assumptions at 90 yen to the dollar.
     However, traders were optimistic about the outlook for
corporate Japan.
    "Conservative forecasts did not lead to pessimism in the
market. They rather made us think, 'oh, they can generate such
profits even at 90 yen, then their actual profits will be way
better at the end of the day,'" said Takuya Takahashi, an
analyst at Daiwa Securities.
    Bucking strength, Takeda Pharmaceutical Co Ltd 
tumbled 6.6 percent after the drugmaker cut its operating profit
forecast for the year through March by 38 percent to 140 billion
yen ($1.4 billion), citing competition from low-cost generic
drugs.
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