Nikkei gains on Wall St rally, investors cautious ahead of earnings

Tue Apr 22, 2014 10:59pm EDT

* Nikkei up 0.7 pct, but still below previous day's high
    * Investors look to earning reports
    * Some buying low P/E names such as Bridgestone gain
    * Seibu Holdings open steady at IPO prices

    By Hideyuki Sano
    TOKYO, April 23 (Reuters) - Japanese stocks rose on
Wednesday morning, spurred by Wall Street gains on solid
earnings and merger activity, but buying was tempered as
investors were wary of the looming local reporting season. 
    The Nikkei rose 0.7 percent to 14,495.44, erasing
its losses on the previous day. However, it remains well below 
Monday's two-week high of 14,649.50.
   The benchmark has been largely stuck between 14,000 and
15,200 for nearly three months, underperforming many of its
peers, partly on disappointment over the absence fresh monetary
stimulus and worries that Japan's economy may be knocked hard by
this month's sales tax hike. 
    The market took its cue from Wall Street, where a host of
solid earnings reports and strength in the healthcare sector
lifted the S&P 500 and Nasdaq to their sixth straight advance.
    A largely in-line Chinese manufacturing survey also helped
to retain the underlying positive mood.  
     Shares in railway and property company Seibu Holdings Inc
 opened in line with its deeply discounted IPO price on
its relisting in Tokyo, reflecting foreign investors' growing
caution over the strength of Japan's economic recovery.
    Seibu opened at 1,600 yen on Wednesday after being delisted
10 years ago due to a scandal involving falsified shareholder
records, faring better than recent IPOs, where share prices fall
sharply from the initial offering prices.
    Resona Bank, a company considered cheap on 
valuation, rose 2.9 percent. Non-bank money lenders also 
ouperformed in the morning, with Aiful rising 6.5 percent
 and Acom 5.7 percent.  
    Among exporters, Mazda rose 2.2 percent.
    Investors are hoping for Japan's corporate earnings season
to provide a catalyst for the Nikkei, with traders noting the 
relatively inexpensive stock valuation at present.
    Rubber products makers provide an example of a sector with
attractive valuations. They were the top performer among the
Tokyo Stock Exchange's 33 industry subindexes on Wednesday
morning, with industry leader Bridgestone rising 2.1
percent.
    "Bridgestone is a typical example of a company with low P/E.
Buying in other names with relatively low P/E could spread,"
said Takashi Hiroki, chief strategist at Monex Securities.
    Bridgestone, which rose almost four percent in the past five
sessions compared to 0.4 percent in the Nikkei, still trades
around 10 times its earnings.
    A large number of Japanese companies will announce their
guidance for their financial year to March 2015 in coming weeks.
    Later in the week, companies such as Shin-estu Chemical
, Hitachi Construction, Fanuc and
Denso announce their earnings.
    The broader Topix rose 0.7 percent to 1,170.19 while
the new JPX-Nikkei Index 400 gained 0.7 percent to
10,649.75.
      

 (Reporting by Hideyuki Sano; Editing by Shri Navaratnam)
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