Nikkei jumps as Ukraine fears ease, battered shares bought back

Tue Mar 4, 2014 9:01pm EST

* Putin's comments ease fear of military conflict in Ukraine
    * China keeps growth target at 7.5 pct, adding support
    * Real estate, securities brokerages among top performers

    By Hideyuki Sano
    TOKYO, March 5 (Reuters) - Japanese stocks jumped on
Wednesday after comments by Russian President Vladimir Putin
eased worries about military confrontation in Ukraine for now,
sparking short covering in battered shares like property
developers.
    The Nikkei share average was up 1.7 percent at
14,974.18 in morning trade, keeping its recovery trend intact
after hitting a low just under the 14,000 mark a month ago. Its
Feb. 25 high of 15,094.54 seen as a possible target.
    "The market liked the fact that the possibility of a
military clash has diminished. If the tensions over Ukraine keep
receding, the market's focus will shift back to economic
fundamentals," said Toshiyuki Kanayama, a market analyst at
Monex Securities.
    While Putin delivered a robust defence of Russia's actions
in Crimea, he said he would use force in Ukraine only as a last
resort, prompting traders to cover short positions in a broad
range of risk assets including the Nikkei. 
    The market drew additional support after Chinese Prime
Minister Li Keqiang said he would maintain the country's
economic growth target for 2014 at about 7.5 percent, as
expected. 
    "If it was cut to, say, 7.2 percent, that could have been
taken as a message that the Chinese leadership is pushing for
structural reforms more than growth," said Soichiro Monji, chief
strategist at Daiwa SB Investments.
    Still, investors may remain cautious towards Tokyo shares on
concerns the Japanese economy could hit a soft patch after a
planned sales tax increase next month.
    "Japanese markets' underperformance is likely to continue
for now. Most investors would want to buy after they see the
impact of the tax hike in April. They have no reason to buy now
except for that Japanese shares are relatively cheap," Monji
said.
    Indeed, many of best performers on Wednesday morning were
those that had been sold heavily so far this year.
    The real estate subindex rose 4.4 percent to
become the top gainer among the Tokyo Stock Exchange's
subindexes.
    The sector, a high flyer last year on hopes that government
stimulus would boost land prices, is still down 16 percent in
the year to date, versus a 6 percent fall in the overall market.
    Mitsui Fudosan rose 4.7 percent and Mitsubishi
Estate gained 4.9 percent, both in heavy trade. 
    Similarly, the securities brokerages subindex -
down 14 percent so far this year - gained 1.9 percent on
Wednesday morning.
    Bucking the trend, Fuji Heavy Industries fell 1.1
percent after it cut its profit estimate on Tuesday.