Nikkei hits fresh 5 1/2-yr high, exporters up on weak yen, upbeat U.S. data

Sun May 19, 2013 9:44pm EDT

* Nikkei hits highest since Dec 2007
    * Exporters lead gains
    * Report of Japan-India resuming talks on nuclear
co-operation pact buoys

    By Ayai Tomisawa
    TOKYO, May 20 (Reuters) - The Nikkei share average surged to
a fresh 5-1/2 year high on Monday morning, as further weakness
in the yen and signs of an improving U.S. economy bolstered
prospects for higher Japanese corporate earnings in the current
business year.
    In mid-morning trade, the Nikkei rose 1.1 percent to
15,298.92 after rising as high as 15,312.87, the highest since
December 2007.
    Exporters led the charge, with Toyota Motor Corp 
rising 1.9 percent, Sony Corp jumping 5.5 percent and
Komatsu Ltd advancing 2.2 percent after the dollar
broke above the 103-yen level on Friday buoyed by strong U.S.
consumer sentiment data.
    Adding to the positive mood was a Nikkei report that Japan
and India are expected to agree at their summit meeting this
month to resume talks toward a civilian nuclear cooperation
pact. Manufacturers of nuclear reactors benefited on the report,
with Toshiba Corp up 2.5 percent, Mitsubishi Heavy
Industries 3.9 percent higher and Hitachi Ltd 
rising 4.2 percent.
     The broader Topix added 1.2 percent to 1,268.80.
    "Strength in the U.S. market and signs of a recovery in the
U.S. economy are serving as a tailwind to the Nikkei's further
gains. It's promising that the yen is staying below 100 yen to
the dollar," said Yutaka Miura, a senior technical analyst at
Mizuho Securities. He expects the Nikkei to stay comfortably 
above the 15,000-mark over the medium term.
    Upbeat data from the United States, Japan's major export
market, has also helped to underpin the Nikkie in recent
sessions. 
     The Dow and the S&P 500 finished at fresh record highs on
Friday after data showed Americans felt better about their
economic and financial prospects in early May, with consumer
sentiment at its highest in nearly six years, while a gauge of
future economic activity rose in April to a near five-year high.
 
    Analysts said that investors are increasingly becoming
upbeat about the prospects for higher Japanese corporate
earnings for the  fiscal year through March, as the weakening
yen has improved the outlook for many exporters. 
    They expect an average operating profit rise of 30 percent
from the previous year, compared with the companies'
conservative forecasts of a 20 percent increase in their
operating profits.
    Many exporters have used assumptions of around 90-95 yen to
the dollar.
    The dollar last traded at 102.83 yen, taking a breather from
its recent sharp rally, but still not far off a 4 1/2 year high
of 103.32 tapped on Friday.
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