* Softbank rebounds 9.6 pct, CEO reassures shares won't be
* Banks boosted after sources say will lend Softbank $21.1
* Kirin falls after cutting 2015 sales target
By Sophie Knight
TOKYO, Oct 16 Japan's Nikkei share average
advanced 1.4 percent on Tuesday as index heavyweight Softbank
Corp rebounded after the company reassured investors a
$20 billion deal to buy 70 percent of Sprint Nextel Corp
would not dilute their shares.
Softbank bounced back 9.6 percent after having lost over 20
percent since rumours of the deal emerged last Friday. Three of
the four banks that sources say will lend Softbank cash for the
deal - Mizuho Financial Group Inc, Sumitomo Mitsui
Financial Group and Mitsubishi UFJ Financial Group
- gained between 1.1 and 1.6 perc e nt.
"It's just clarity on the structure. People didn't know if
they were going to have to pay higher than what was rumoured,
they were concerned about dilution, and (Softbank CEO Masayoshi)
Son came out and flat-out denied that," said a partner at a
foreign hedge fund.
"But given how much it was sold off before, it's just a
relief rally," said the partner, who did not want to be named.
"There's a lot more execution risk than before so I don't think
it's going to go back where it was."
The Nikkei added 123.38 points to 8,701.31 as
investors picked up battered cyclical stocks that were hurt last
week on worries about poor earnings from companies hit by a
global slowdown, a strong yen and anti-Japanese sentiment in
A slightly softer yen against the dollar on strong U.S.
retail sales and expectations of further easing from the Bank of
Japan also put a floor under exporters including consumer
electronics companies, with Toshiba Corp gaining 3.8
percent and Sony Corp up 2.4 percent.
However, analysts attributed the day's gains to
short-covering, saying little new money was flowing into the
market despite the atmosphere turning more "risk-on", with the
defensive food sector down 0.1 percent and the
riskier shipping subindex up 3.7 percent.
"There at two factors at play; firstly, the feeling that bad
earnings and forecast cuts are already priced in, and secondly,
Obama's slight recovery after losing a debate in the U.S.
election run-up, " said Eiji Kinouchi, chief technical analyst
at Daiwa Securities.
"Romney's financial plan may be more pro-business but he is
against monetary easing, while no one thinks he will be able to
scrap capital gains tax with U.S. stocks at these heights."
However, Kinouchi warned that the market was likely to
remain boxed in a range until the election as investors hold
back from making big moves.
Kirin Holdings Co lost 2.4 percent after the beer
and beverages maker cut its sales target for 2015 to 2.3
trillion yen ($29.20 billion), down from a previous forecast of
3 trillion, due to a sluggish domestic market.
The broader Topix rose 1.3 percent to 732.40 in
moderate trade, with volume at 98.3 percent of its 90-day
Many companies on the Topix are now trading below book
value, with an average price-to-book ratio of 0.9, according to
Thomson Reuters Starmine, compared with the S&P 500's ratio of
2.2.However, estimates from Thomson Reuters Starmine show
expectations for an average negative earnings surprise from
Topix companies of 1.4 percent for 2012, while an average 0.1
percent positive su r prise is expected for S&P 500 stocks.
"The forecasts are far from over so we're not going to see
these gains sustained... we're just sitting and waiting for
earnings to come through now," said Jun Yunoki, equity analyst
at Nomura Securities.
Out of the 8 percent of companies on the S&P that have
reported results so far, 58 percent have topped expectations.