Nikkei hits 2 wk-high in subdued trade, non-banks surge on rule change talk

Sun Apr 20, 2014 11:20pm EDT

* Nikkei rises 0.6 pct, Topix up 0.4 pct
    * Nonbank shares soar on report of possible easing of rules
    * Trading quiet as many global markets closed for Easter
    * Investors eye corporate earnings

    By Tomo Uetake
    TOKYO, April 21 (Reuters) - Japanese shares climbed to a
two-week high on Monday morning, led by gains in nonbank lenders
on a media report the government is considering easing rules in
the industry, though trading activity was thin due to the
Easter.
    The benchmark Nikkei gained 0.6 percent to 14,607.98
by the midday break, after rising as high as 14,649.50, a level
last visited on April 8. Still, the index is down more than 10
percent since the start of this year, hurt by concerns over the
impact of a national sales tax hike, disappointment the central
bank won't offer fresh near term stimulus and slowing growth in
China.  
    Non-bank lender shares surged on a report in the Nikkei
business daily that Japan's ruling party is considering raising
the ceiling on interest rates they charge on borrowers,
reversing tighter regulations introduced in 2010.
    Acom Co Ltd soared 11.3 percent while Aplus
Financial Co Ltd jumped 19.6 percent. Credit Saison Co
Ltd > advanced 5.6 percent at one point to become the
second biggest gainer in the Nikkei average.
    Banks that hold investments in the non-bank financial sector
also benefited, with Shinsei Bank Ltd  rising 4.5
percent to become the top performer in the Nikkei. Among the
biggest banks, Sumitomo Mitsui Financial Group Inc 
gained 1.2 percent at one point.
    Exporters were among the gainers as the yen slipped to a 2
1/2-week low of 102.71 yen to the dollar, with Mazda
Motor Corp rising 2.4 percent and Mitsubishi Motors
Corp up 3.5 percent. The yen took a knock after data
showed Japan's export growth slowed sharply in March compared to
a year earlier due to weaker shipments to China. 
    Overall, trading was thin across blue-chip stocks, with many
foreign investors out for the Easter holiday in their respective
markets. 
    "There has been no new order placed by overseas investors.
Their activity level has been very low," Shun Maruyama, chief
Japan equity strategist at BNP Paribas.
    Analysts believe a decent earnings season could provide a
catalyst to buy Japanese shares, adding they present attractive
entry levels. 
    The Japanese corporate earnings season will kick off later
in the day, with industrial robot maker Yaskawa Electric Corp
 announcing its results after the closing bell.
    "Global portfolios remain underweight Japan after selling a
net three trillion yen worth stocks in the January-March period
this year," said Masatoshi Kikuchi, pan-Asian chief equity
strategist at Mizuho Securities.
    "It is clear that underperformance or low valuations of
Japanese equities alone are not sufficient to persuade overseas
investors to buy Japan. They need to be convinced by
fundamentals." 
    Foreign investors bought a net 13 trillion yen in 2013,
helping the benchmark Nikkei become one of the best performers
in the world.
    The broader Topix advanced 0.4 percent to 1,178.17
in subdued trade, with trading volume at 37.2 percent of full
daily average for the past 90 days by the midday break.
    The new JPX-Nikkei Index 400 added 0.4 percent
to 10,718.05.

 (Editing by Shri Navaratnam)