Nikkei climbs to 3-month high on solid U.S. jobs data

Sun Jun 8, 2014 10:49pm EDT

* Nikkei rises 0.5 pct, Topix up 0.3 pct
    * High beta stocks lead gains
    * Technical gauges indicate signs of overheating

    By Tomo Uetake
    TOKYO, June 9 (Reuters) - Japanese shares hit a three-month
high on Monday morning after a solid U.S. May jobs report
provided the latest confirmation of slow but steady improvement
in the world's largest economy and its labour market.
    The benchmark Nikkei gained 0.5 percent to 15,156.32
by the midday break, after rising as high as 15,206.57, a level
last seen on March 11. The index has gained about 445 points, or
more than three percent, over the past five trading days.
    "Japan remains the best and most leveraged play on the
U.S.-led upturn in global growth that we expect to continue for
the next few years," wrote Trevor Greetham, director of asset
allocation at Fidelity Worldwide Investment on the company's
official blog.
    On Monday, Japan revised up its growth number for the first
quarter, which grew an annualised 6.7 percent, compared with the
initial 5.9 percent reading. Analysts said the upward revision
didn't boost the Nikkei as it was in line with expectations. 
 
    The Nikkei's steep gains in the past week raised concerns
that the market may be overbought in the very near term, and
some investors were selling into the rally.
    The Topix's 14-day relative strength index rose above 70 and
the up-down ratio, the ratio of the number of shares that rose
over the past 25 sessions divided by that of falling shares, was
well above 120, both seen as indicating an overbought zone.
    Wall Street closed at all-time highs on Friday after figures
showed that U.S. employers kept up a solid pace of hiring in
May, returning employment to pre-recession level and offering
confirmation the economy has snapped back from a winter slump.
 
    "The U.S. jobs data was strong but came in very much as
expected," said Mitsushige Akino, chief fund manager at
Ichiyoshi Asset Management.
    "The Tokyo market merely followed the movement of U.S.
markets. Given that we are hovering in the overbought levels
already and there is no real catalysts domestically, it would be
difficult to drive the momentum further." 
    But investors seem relatively bullish on the market,
rotating into high beta shares - those with high volatility --
from defensive shares.
    Sea transporters, real estate companies
 and warehouse and port operators advanced
between 0.8 percent and 1.3 percent. 
    Mitsui O.S.K. Lines Ltd and Sumitomo Realty &
Development Co Ltd climbed 1.8 percent and 1.9 percent,
respectively.
    "On the whole, investors are cautiously optimistic. They are
likely to keep rotating to high beta shares," said Yasuo Sakuma,
portfolio manager at Bayview Asset Management.
    Komatsu Ltd rose 1.9 percent and Hitachi
Construction Machinery Co Ltd jumped 2.6 percent,
helped by growing expectations that the Chinese economy is
stabilising after a slowdown, with hefty gains in recent
sessions in rival Caterpillar also boosting sentiment.  
  
    By midday, the broader Topix added 0.3 percent to
1,238.28 in moderate trade, with trading volume at 36.2 percent
of full daily average for the past 90 days.
    The new JPX-Nikkei Index 400 advanced 0.3
percent to 11,277.19.

 (Editing by Richard Borsuk)
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