* Cyprus parliament to vote on bailout on Tuesday
* Kirin advances 2.4 pct on buyback plan
By Dominic Lau
TOKYO, March 19 Japan's Nikkei average rebounded
1.9 percent on Tuesday, regaining some but not all ground lost
after a proposal to tax Cyprus savers to help fund the island's
bailout raised concerns about the stability of Europe's banking
The Nikkei gained 227.13 points to 12,447.76 after
sliding 2.7 percent in the previous session, its biggest one-day
drop in 10 months.
A senior trader at a foreign bank in Tokyo said financial
markets were likely to experience higher volatility as investors
tried to assess how serious the Cyprus deal would have on the
euro zone's banking system.
"We were one of the biggest markets to open post-Cyprus
situation. People took the opportunity to sell the most liquid
market first," the trader said. "There was a bit of knee-jerk
reaction ... We are bouncing this morning. It is not a
Ahead of a parliamentary vote in Cyprus that will either
secure the island's financial rescue or threaten default, euro
zone ministers have urged Cyprus to let smaller savers escape a
levy on bank deposits.
Still, many in the markets are concerned that it will set a
precedent that could lead to other bailout countries imposing
something similar to depositors.
"My sense is that domestic investors are probably small
sellers today in this bounce," said the trader at the foreign
bank. "I don't think they really sold much yesterday. We also
have a lot of programme flow today, which means sort of
portfolio rebalancing flows."
Overnight losses in European markets and Wall Street were
not as severe as in Tokyo on Monday, helping ease investors'
concerns. Europe's FTSEurofirst 300 slipped 0.3 percent
and U.S. S&P 500 eased 0.6 percent.
Toyota Motor Corp, Sony Corp, Mazda Motor
Corp and Sumitomo Mitsui Financial Group were
up between 1.8 and 4.4 percent.
Sony was the most traded on the main board by turnover,
while Toyota was the fourth-most traded.
Investors are also focused on the U.S. Federal Reserve
two-day policy-setting meeting starting later in the day and the
change of leadership at the Bank of Japan this week.
The benchmark Nikkei has rallied nearly 44 percent since
mid-November after Prime Minister Shinzo Abe embarked on
aggressive fiscal expansionary and monetary easing policies to
revive the ailing economy.
Goldman Sachs remained upbeat on Japanese equities, lifting
its 12-month Topix target to 1,250 from 1,100.
"Without a doubt, going "long Japanese equities" has become
one of the most popular trades among global investors in 2013.
This is not to say, however, that every long-only foreign
investor is neutral or overweight Japan," Goldman Sachs said in
"We estimate that if the underweight gap of 2.8 percentage
points of EAFE-benchmark mutual funds were to close, this could
imply roughly $42 billion of potential foreign inflows from this
Foreign investors bought 1.12 trillion yen ($11.7 billion)
worth of Japanese shares in the week through March 9, their
largest net buying since the Ministry of Finance began
collecting the data in 2005.
They bought a total of 5.36 trillion yen in the past 17
weeks, versus 5.80 trillion in their 19 straight weeks of net
buying when reformer Junichiro Koizumi was the prime minister.
The broader Topix index advanced 1.6 percent to 1,044.66 on
Other notable gainers included Kirin Holdings Co Ltd
, up 2.4 percent after it the brewer said it would spend
up to 50 billion yen to buy back as much as 5.2 percent of its
shares outstanding to lift shareholders' returns.
In the current environment of low interest rates, Bank of
America Merrill Lynch highlighted a list of Japanese stocks that
it said offer sustainable yields for investors.
Those stocks included brewer Asahi Group Holdings,
retailer Seven & I Holdings, trading company Itochu
Corp, lender Mitsubishi UFJ Financial Group,
Nippon Building Fund Inc and optical maker Hoya Corp