Nikkei bounces off 6-week low, economic uncertainty caps gains

Sun Mar 23, 2014 10:50pm EDT

* Nikkei rises 1.8 pct, Topix up 2 pct on receding Ukraine
fears
    * Uncertainty ahead of Apr 1 sales tax hike casts shadow
    * Retail investors chase high dividend plays
    * Tokyo Electron gains on upbeat view on semiconductors
    * Nikkei still on track for first quarterly loss in six

    By Tomo Uetake
    TOKYO, March 24 (Reuters) - Japan's Nikkei share average
climbed on Monday morning, bouncing off from a six-week low on
the back of a tentative recovery in risk appetite, though
concerns about the Japanese economic outlook kept gains in
check.
    The benchmark Nikkei average rose 1.8 percent to
14,484.06 by the midday break, after a market holiday on Friday.
It was still below its 200-day moving average near 14,505. 
    The gains were in line with rise in global shares due to
easing concerns over the Ukraine crisis, as investors see
diminishing chances of a major military confrontation between
Moscow and the West.
    Still, the Nikkei stood not far from a six-week low near
14,200 hit last week and was down 11 percent since the start of
this year, likely heading for its first quarterly decline in
1-1/2 years.
    "Although the first spring storm of the year hit Tokyo area
last week, spring has yet to come for the Japanese stock
markets," said Masatoshi Kikuchi, pan-Asian chief equity
strategist at Mizuho Securities. 
    "It'll be difficult for the Nikkei to rise to 16,000 by the
fiscal year-end but I still expect the benchmark will reach
16,500 yen by the end of June, buoyed by the prime minister's
growth strategy due in June and solid corporate earnings," he
added.
    One reason behind Tokyo shares' underperformance was
concerns about the impact of a planned sales tax hike on April
1, said Stefan Worrall, director of equity cash sales at Credit
Suisse in Tokyo.
    "Market participants need to recalibrate, particularly when
there is a such intense uncertainty over the direction of the
Japanese market towards the end of fiscal year (on March 31)."
    "There's a big focus on if the BOJ is willing or ready to
undertake further monetary policy actions...a lot of clients
continue to expect or hope that it occurs." 
    Stocks offering high dividends or other shareholder benefits
enjoyed a decent bounce before the dividend record date on
Wednesday, with Eisai Co Ltd, ANA Holdings Inc 
and Daiichi Sankyo Co Ltd up between 3.2 and 4.4
percent.
    Tokyo Electron, a manufacturer of chip-making
machines, jumped 5.4 percent, supported by growing optimism for
the semiconductor industry following news of strong capital
spending plans by makers of computer chips. 
    Other notable gainers include Yamato Holdings,
which gained 3.5 percent after the Nikkei newspaper reported
that the delivery company will tie up with China Post to launch
a delivery service in China.  
    The market took soft Chinese manufacturing data in its
stride for now. The flash Markit/HSBC Purchasing Managers' Index
(PMI) fell to an eight-month low of 48.1 in March from
February's final reading of 48.5 as output and new orders both
weakened. 
    The broader Topix advanced 2 percent to 1,169.32,
with trading volume at 55 percent of full daily average for the
past 90 days.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprised of companies with a high return on equity and
robust corporate governance, added 1.9 percent to 10,586.35.

 (Editing by Eric Meijer)
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