Nikkei steadies after hitting 2-mth high on ECB cuts; U.S. jobs eyed

Thu Jun 5, 2014 10:46pm EDT

* Nikkei flat but on track for biggest gain in 7 weeks
    * Growth-sensitive stocks rally
    * ECB policy decision lifts European and U.S. stocks
    * Focus turns to U.S. jobs data

    By Tomo Uetake
    TOKYO, June 6 (Reuters) - Japanese shares steadied on Friday
after briefly climbing to a two-month high on Friday morning, as
investors took a 'buy-the-rumour, sell-the-fact' approach after
the European Central Bank cut rates to record lows in a well
telegraphed move overnight.
    The benchmark Nikkei ended the morning session flat
at 15,077.09, after rising as high as 15,144.34, a level last
seen on April 3. Still, the index was headed for its biggest
weekly gain in seven weeks. 
    The market rose initially, tracking Wall Street after the
ECB cut interest rates to record lows and pledged to do more if
needed to fight off the risk of deflation. 
 
    However, with the ECB steps largely factored in by
investors, some profit taking likely kicked in, market players
said.
    Technical signs of an overbought market after the rally of
around eight percent in just over two weeks also checked buyers.
    The relative strength index rose above 70, a level seen as
indicating an overbought territory.
     "We are at a crucial stage now to see whether we can climb
up this wall of anxiety," said Yasuo Sakuma, portfolio manager
at Bayview Asset Management. 
    "We have technical signals showing an overheated market and
there is U.S. payrolls data coming up. If we can get over this,
that is to say if we can stay firmly above the 15,000 mark, we
could see a nice summer rally after a bit of consolidation." 
    Underlying support was evident on expectations the Japanese
government will accelerate its push to make the public pension
fund buy more stocks.
    Japanese Health Minister Norihisa Tamura said on Friday that
he was instructed by Prime Minister Shinzo Abe to accelerate the
asset allocation review by the country's $1.26 trillion public
fund, the Government Pension Investment Fund. Tamura said he
will urge the GPIF to complete the review process quickly by
taking into account changes in Japan's economic environment.
 
    Growth-sensitive stocks were among the best performer. Sea
transporters and miners, which have a
relatively strong correlation with the health of the global
economy, rose 1.4 percent and 0.8 percent, respectively. 
    Sumco Corp, among some of the shares showing a
surge in interest, jumped as much as 9.9 percent to a
4-1/2-months high. It followed a local media report that the
price of silicon wafer, its main product, steadied this quarter
after two years of fall.  
    The broader Topix added 0.2 percent to 1,234.60 by
the midday break in moderate trade, with trading volume at 48.3
percent of full daily average for the past 90 days.
    The new JPX-Nikkei Index 400 edged up 0.1
percent to 11,248.40.

 (Editing by Shri Navaratnam)
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