Japan stocks bounce back, subprime snub lifts banks
(Adds stocks and comments)
TOKYO, Dec 20 (Reuters) - Japanese stocks bounced back on Thursday after a six-day losing streak, with bank shares including Mitsubishi UFJ Financial Group (8306.T) up on news they will refuse to pay into a U.S.-led subprime rescue fund.
Still, with high volatility in thin trade and a lack of powerful market-moving factors, shares struggled to rise and some participants said the market could go in either direction led by very short-term trades.
"If positive expectations exist here, they are only expectations for a rebound. But these alone cannot put the market on a solid footing," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
"Concerns about the subprime problems and the economic outlook are overwhelming the kind of expectations that create an upward trend."
At the same time, falls are seen limited, as bargain hunting by long-term investors such as pension funds is expected at around 15,000 on the Nikkei average .N225.
The benchmark Nikkei ended the morning session up 0.7 percent at 15,139.01 and the broader TOPIX index gained 0.7 percent to 1,466.89.
Trade was thin, with 793 million shares changing hands on the Tokyo bourse's first section compared with last week's morning average of 1 billion.
Declining shares outnumbered advancers by nearly two to one.
BANKS GAIN
Japan's three largest banks, Mitsubishi UFJ Financial, Mizuho Financial Group (8411.T) and Sumitomo Mitsui Financial Group (8316.T), rose sharply on news that they plan to reject a request to help finance a U.S.-led subprime rescue fund.
Financial sources said the three banks turned down the fund request because of concerns over putting their capital at risk. [ID:nT102827]
MUFG climbed 3.3 percent to 1,065 yen and Mizuho rose 2.8 percent to 544,000. Sumitomo Mitsui rose 4.1 percent to 863,000.
Bank shares were also buoyed by news that Morgan Stanley (MS.N) will receive an investment of $5 billion from China's foreign exchange fund.
"Bank shares have been oversold in the first place. But uncertainties remain ahead of Bear Stearns BSC.N earnings later today," said Shigemi Nonaka, a special adviser at Polestar Investment Management. Continued...
