* Blue-chips lead gains
* Cyprus parliament to vote on bailout later on Tuesday
* Underlying trend still bullish- analysts
By Tomo Uetake
TOKYO, March 19 Japan's Nikkei average rebounded
2 percent at the midday break on Tuesday, regaining some ground
lost in the previous session after a controversial bailout
proposal for Cyprus raised concerns about the stability of
Europe's banking sector.
The Nikkei gained 246.55 points to 12,467.18 after
sliding 2.7 percent on Monday, its biggest one-day drop in 10
"On Monday, futures-led selling that pushed the Nikkei and
Topix down while many smaller, individual stocks, remained
intact. So today, some blue-chips that fell yesterday are
bouncing back," said Kenichi Hirano, market analyst at Tachibana
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
controversial levy on bank deposits.
Still, investors are concerned that forcing ordinary
citizens to fund the bank rescues up front, through a tax on
deposits, is setting a precedent that could lead to other
bailout countries imposing something similar on depositors.
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.
Sony Corp surged 4.9 percent and was the most
traded on the main board by turnover. Mazda Motor Corp
jumped 4.2 percent and Nikon Corp rose 3.5 percent.
Other notable gainers included Sumco Corp, up 5.2
percent after Citigroup raised the silicon wafer maker's target
price by 42 percent and increased its operating profit forecast
for the fiscal year ending January 2015 by 4.2 percent.
All but one of the 33 sectors gained. Shippers
climbed 5 percent to become the best sectoral performer on the
The broader Topix index was up 1.7 percent at 1,045.86 by
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.
The index was 5.9 percent above its 25-day moving average,
which is currently at 11768.41, and Hirano said he sees the
market is in a correction phase.
"I expect the current correction phase to last until the
divergence between the Nikkei and its 25-day moving average to
come within 0.5 percent, which I think will be around the middle
of next week. Yet the underlying trend is still bullish."
Investors are also focused on the U.S. Federal Reserve's
two-day policy-setting meeting starting later in the day and the
change of leadership at the Bank of Japan this week.
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 purchase 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 the 19 straight weeks of net
buying when reformer Junichiro Koizumi was the prime minister.