Nikkei edges up in choppy trade, utility stocks outperform

Mon May 13, 2013 11:15pm EDT

* Utility shares outperform on Nomura's rating hikes
    * Nomura expects 26.2 pct rise in large caps' profits
    * Brokerage stocks fall on profit-taking
    * Nikkei and Topix in and out of positive territory

    By Ayai Tomisawa
    TOKYO, May 14 (Reuters) - The Nikkei share average edged up
on Tuesday as gains in utility stocks offset weakness in
brokerages while trading remained choppy with investors growing
more circumspect over the rapid pace of the latest rally.
    Traders said that the index may end in negative territory on
Tuesday as investors could pocket profits from the recent gains,
but losses should be limited by optimism from the weak-yen
trend.
    The Nikkei gained 0.2 percent to 14,817.10 by the
midday break, an inch away from a 5-1/2 year high of 14,849.01
tapped on Monday. The index dipped into negative territory
earlier, seen as a reflection of natural caution after the
market's recent steep gains.
    The utility sector, was up 9 percent and the best
sectoral performer. Kansai Electric Power Co and Kyushu
Electric Power Co. gained 17 percent and 12 percent
after Nomura Securities hiked their ratings citing the high
likelihood of the two resuming nuclear power generation in the
medium term. 
    Brokerage stocks lost ground after soaring the previous day
on expectations of much higher commission income as trading
volume surged. Nomura Holdings fell 1.2 percent and
Daiwa Securities dropped 0.9 percent.
    Struggling audio equipment maker Pioneer Corp 
jumped 31 percent and was the second-biggest percentage gainer
after saying it would form a capital alliance with NTT DoCoMo
Inc and increase ties with Mitsubishi Electric Corp
 to improve its financial base.
    Exporters were mixed. Toyota Motor Corp shed 0.8
percent, Honda Motor Co dropped 0.6 percent, but Sony
Corp rose 1.9 percent.
    "The market is short of new catalysts for now as most of the
corporate earnings are out. Since we have confirmed that
companies' conservative earnings forecasts for this year will be
revised up, the mid-term trend should be positive," said
Nobuhiko Kuramochi, strategist at Mizuho Securities. "Under the
current guidance from companies, the Nikkei's resistance level
is seen around 15,000."
    Most exporters based their foreign exchange assumptions at
90-95 yen to the dollar for the year ending March 2014, while
the dollar trades around mid-101 levels. The weaker yen lifts
exporters' competitiveness abroad and raises profits when
repatriated.
    "The market expects earnings upward revisions in the fall,
when prospects for the fiscal year end will be clearer. Then,
the Nikkei's levels at 16,200-17,300 will be in sight,"
Kuramochi said.
    Nomura Securities expects an average of 26.2 percent rise in
operating profit for 188 of 330 Russell Nomura large-cap stocks
excluding financials which already reported their full-year
earnings. The 188 companies expect an average of 19.6 percent
rise in their operating profit for the current business year.
    The broader Topix gained 0.2 percent to 1,235.08.
    Since the dollar pierced the 100 yen mark last Thursday, the
Nikkei has gained 4.4 percent and is trading about 8.0 percent
above its 25-day moving average.
    "The market is seesawing between worries about the steep
rises and hopes for the government's growth strategy," said
Yoshiyuki Kondo, an analyst at Daiwa Securities. "It seems like
good timing to see a pause in the market."
    The Nikkei has gained about 43 percent this year, bolstered
by expectations for the government's growth policies and
aggressive monetary easing by the Japanese central bank.
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