Nikkei rises as strong yen trend pauses; geopolitical tensions cap upside

Mon Jul 21, 2014 10:29pm EDT

* Geopolitical tensions still in focus, strong yen trend
pauses
    * Market's attention on April-June earnings which kick off
this week

    By Ayai Tomisawa
    TOKYO, July 22 (Reuters) - Japan's Nikkei share average rose
on Tuesday morning after the three-day weekend, with exporters
pulling ahead as the strong yen trend paused although
geopolitical concerns checked the upside.
    In the Gaza Strip, Israeli jets, tanks and artillery
continued to pound Gaza as the death toll from a two-week
conflict topped 500. 
    Malaysia has reached an agreement with the leader of the
separatist group to retrieve the bodies of the victims from last
week's downing of a Malaysia Airlines passenger jet as well as
the plane's two black boxes, Malaysian Prime Minister Najib
Razak said on Tuesday. 
    The Nikkei gained 0.7 percent to 15,314.20 in
mid-morning trade as investors returned after Monday's holiday.
The index fell 1.0 percent to its lowest closing level since
July 11 on Friday as investors fled riskier assets on news the
Malaysian Airlines passenger jet was shot down near the
Ukraine-Russia border.
    A pause in the yen's uptrend and gains in U.S. futures
  encouraged buyers in Tokyo. However, developments
in Russia and Ukraine remain a focus for investors, market
players said.
    "Investor sentiment has settled as the VIX has stayed calm
and there is few sign that the yen will spike for the time
being," said Akio Yoshino, chief economist at equity research
and strategy department at Amundi Japan.
    "How Western countries will take action against Russia, and
how Russia will respond to that is in focus."
    The CBOE Volatility Index, which is often referred to
as 'the fear gauge', jumped 32.2 percent on Friday in Asia, the
biggest percentage rise since April 2013.
    The dollar crept up 0.1 percent to 101.48 yen, having
pulled back from a low of 101.09 hit late last week.
    Exporters rose, with Honda Motor Co adding 0.8
percent, Panasonic Corp up 1.8 percent and Sony Corp
 advancing 0.4 percent.
    JFE Holdings outperformed the market, jumping 2.2
percent after the Nikkei business daily quoted President
Hisanori Kanou as saying that the steelmaker plans to double
production capacity at its Myanmar steel structure site in
fiscal 2015. 
    Amundi's Yoshino said that investors will be keeping a close
eye on corporate earnings for April-June this week, which is
expected to confirm that a majority of companies have weathered 
the impact of a national sales tax rise in April.
    He expects the Nikkei to trade between 14,800-15,700 over
the next month.
    The broader Topix gained 0.6 percent to 1,270.27,
while the JPX-Nikkei Index 400 advanced 0.5 percent
to 11,564.94.
    

 (Editing by Shri Navaratnam)