Nikkei regains ground as yen weakens, inflation less than forecast

Thu Apr 24, 2014 10:49pm EDT

By Shinichi Saoshiro
    TOKYO, April 25 (Reuters) - Japanese shares gained on
Friday, buoyed by a weaker yen and after inflation data came in
lower than expected, reinforcing some hopes for further monetary
easing by the Bank of Japan.
    The Nikkei share average 0.7 percent to 14,498.89 in
morning trade, moving back towards a two-week high of 14,650 hit
on Monday. The index had shed 1 percent on Thursday as the lack
of a breakthrough in U.S.-Japan trade talks disappointed some
investors.
    "Yesterday's selling was overdone, and a steady performance
on Wall Street overnight set the market on course for a
rebound," said Soichiro Monji, chief strategist at Daiwa SB
Investments in Tokyo. 
    "And although this is not a huge factor, the slightly
weaker-than-expected Tokyo CPI data reinforced hopes for further
BOJ easing," he said.
    Core consumer prices in Tokyo, a leading indicator of
nationwide inflation, rose 2.7 percent in April from a year
earlier to mark the biggest gain in more than two decades.
    But when the impact of a sales tax hike implemented on April
1 is stripped out, Tokyo consumer inflation came in at 1.0
percent, indicating that Japan is still some way off the central
bank's 2 percent price target. 
    The dollar rose 0.1 percent to 102.42 yen, pulling
away from a one-week low of 102.085 hit on Thursday.
    A wait-and-see mood also prevailed ahead of earnings
guidance from a number of Japanese companies for the new fiscal
year to March 2015.
    Nikkei heavyweights Fanuc, an industrial robot
manufacturer, and Denso, an autoparts maker, will
announce their earnings Friday.
    Market participants will focus on individual stocks
throughout the earnings season rather than the macro picture,
said Kyoya Okazawa, head of global equities at BNP Paribas in
Tokyo.
    Earnings announced after Thursday's market close were
generally upbeat. 
    Fuji Electric shares jumped 6.9 percent after the
company forecast a 15 percent increase in operating profit for
the current financial year after a 51 percent rise in the
previous year.
    Hitachi Construction rose 2.6 percent after the
company's profit estimates for the year ending in March beat
analysts' forecasts.
    But Mitsubishi Motors slipped 1.1 percent even
after the automaker on Thursday posted record profits for the
year that ended in March and said it expected to hit its midterm
annual operating profit target of 135 billion yen in this
financial year to March 2015, two years earlier than planned.
 
    Still, Mitsubishi Motors has outperformed the broader market
so far this month, rising about 1.3 percent compared with a fall
of 1.9 percent for the Nikkei.
    Mining shares were among the best performers,
rising 2.9 percent. Analysts said a rise in oil prices buoyed
the sector.
    The new JPX-Nikkei Index 400 rose 0.79 XX
percent to 10,682.30.

 (Additional reporting by Hideyuki Sano and Lisa Twaronite in
Tokyo; Editing by Chris Gallagher)