Nikkei jumps on improved China PMI, Fed minutes; exporters rise

Wed May 21, 2014 10:09pm EDT

* Exporters gain on weak yen vs dollar after Fed optimism
    * Sanrio dives as GS cuts target on plan to shift focus to
goods sales

    By Ayai Tomisawa
    TOKYO, May 22 (Reuters) - Japan's Nikkei share average rose
sharply on Thursday morning as a survey showing an encouraging
improvement in Chinese manufacturing added to an already upbeat
mood after the U.S. Federal Reserve reaffirmed its commitment to
support the economy.
     China's factory sector turned in its best performance in
five months in May, a preliminary HSBC survey showed on
Thursday. 
    While the overall manufacturing sector still contracted, the
survey provided some reassurance to markets worried about the
slowdown in the Asian economic powerhouse. 
     Fanuc Corp gained 0.7 percent and Komatsu Ltd
 added 0.6 percent.
     The Nikkei rose 1.5 percent to 14,245.15 in
mid-morning trade after falling 0.2 percent to 14,042.17 on
Wednesday. The index still trades below its 25-day moving
average of 14,288.71.
    Risk appetite improved after minutes of the Federal
Reserve's late April meeting showed policymakers discussed exit
strategies from ultra-loose monetary policy. But they also made
clear that the Fed was not signalling that it was ready to
"normalize" policy or raise interest rates any time soon.
 
    That buoyed U.S. stocks on Wednesday, helping steer Asian
shares up nicely.
     The early spotlight fell on Sanrio Co, creator of
characters including Hello Kitty, which dived 22.5 percent to
2,410 yen, the lowest since August 2012 and was the most traded
stock by turnover. 
    Reflecting branding concerns after the company said it will
shift its focus to goods sales from licensing, Goldman Sachs cut
its target price to 3,200 yen from 3,800 yen.
    Sanrio's plan "is conducive to high efficiency and rapid
growth but also carries brand dilution risk, to merchandise
sales, which are more stable. We expect cost to rise in the
short term," the brokerage wrote in a report.
    The Nikkei's main support came from exporters after the 
dollar gained against the yen for the first time in six sessions
and fetched 101.46 yen, well off a 3-1/2 month low of
100.80 plumbed overnight. 
    Toyota Motor Corp rose 0.9 percent, Sony Corp
 added 1.2 percent and Honda Motor Co advanced
1.0 percent.
    A weak yen boosts Japanese companies' profits overseas when
repatriated and raises their competitiveness abroad.
    "Investors took heart from the Fed and the dollar-yen level,
but it still seems like a technical rebound," said Nobuhiko
Kuramochi, a strategist at Mizuho Securities.
    Kuramochi with the Bank of Japan chief Haruhiko Kuroda on
Wednesday giving no hint of further monetary easing, the market
has shifted its focus companies' earnings in the April-June
earnings after the sales tax rose in April.
    Ahead of the earnings, the Nikkei will likely be mired in a
range of 14,000-14,500, he said.
    The broader Topix gained 0.6 percent to 1,156.76,
and the new JPX-Nikkei Index 400 added 0.6 percent
to 10,550.65.

 (Editing by Shri Navaratnam)
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