* Securities, banking sectors in demand
* Investors more discriminating about exporters - trader
* Isuzu, Nissan sag after earnings show little yen upside
By Sophie Knight
TOKYO, Feb 12 Japan's Nikkei share average
rebounded on Tuesday, boosted by financials after a U.S.
Treasury official voiced support for Japan's aggressive policies
to combat deflation and bolster growth, while a softer yen
propped up some exporters.
Investors shrugged off reports that North Korea had likely
launched a nuclear test during Tokyo's midday break, although
stocks pared gains slightly through the afternoon as the yen
dropped back below 94 to the dollar from a 33-month high of
The benchmark rose 1.9 percent to 11,369.12, within
reach of a 33-month high of 11,498.42 struck last Wednesday. The
benchmark has risen 31 percent since mid-November.
"The upward trend in Japanese stocks provided a tailwind to
the securities sector on hopes that the rallies would bolster
their commission income," said Yuya Tsuchida, a strategist at
The securities sector was the best-performing
sector on the main board, propelled up 4.7 percent as Nomura
Holdings soared 5.5 percent in heavy trade and Daiwa
Securities Group jumped 4 percent.
The banking sector was next in line, rising 2.8
percent thanks to Mizuho Financial Group Inc and
Sumitomo Mitsui Financial Group Inc gaining 4.8 percent
and 3.5 percent, respectively, in heavy trade.
Japan's aggressive expansionary monetary policies have
sharply weakened the yen in recent months, prompting concerns in
Europe and the United States.
With finance ministers from the Group of 20 nations
scheduled to meet this week, investors betting on a weaker yen
were relieved after U.S. Treasury Undersecretary Lael Brainard
said Washington supports Japanese efforts to end deflation and
"Her comments gave confidence to the market. It was
surprising, and was taken as the Obama administration giving a
green light to 'Abenomics'," said Takuya Takahashi, a market
analyst at Daiwa Securities, adding that he expects the Nikkei
to remain strong this week.
However, Brainard also said that it was important to abide
by the G7's commitment to floating exchange rates that reflect
Japanese ministers and government officials have repeatedly
vocalised their desired levels for the exchange rate. Japan's
economy minister, Akira Amari, was quoted by media as saying on
Saturday that the government will increase economic efforts to
help the Nikkei reach 13,000 by the end of March, 14 percent
above its current level.
Analysts said that the yen looks set to stay under pressure
on expectations that Prime Minister Shinzo Abe will endorse a
far more dovish Bank of Japan regime when the current
leadership's term ends next month.
The BOJ, which last month adopted a 2 percent inflation
target as a sign of its commitment to fight deflation and
announced a shift to "open-ended" asset buying, is expected to
refrain from taking fresh easing steps at its two-day meeting
ISUZU, NISSAN UNDERPERFORM
While exporters across the board have seen sharp gains over
the past three months as the yen has softened, prompting
expectations of increased overseas revenues once repatriated, a
mixed earnings season has left investors more discriminating.
"There is now a clearer difference between companies that
were just bought on speculation of higher earnings and those
that are actually showing signs of promise," said Masato Futoi,
head of cash equity trading at Tokai Tokyo Securities, adding
that there is still room for the latter to be bought.
Toyota Motor Corp, which attributed its profit
forecast hike to the weak yen last week, gained as much as 3.2
percent to top the 5,000 yen level for the first time since
August 2008, before paring gains to end 0.5 percent up. That
left it 60 percent higher than in mid-November, almost double
the Nikkei's gain in the same period.
Meanwhile, shares of Canon Inc, which derives 80
percent of its sales abroad, advanced 2.2 percent.
On the other hand, Nissan Motor Co lost 3.8 percent
after it bucked the optimistic trend among other Japanese
carmakers by leaving its annual profit forecast unchanged as
sluggish sales weighed on its bottom line.
Likewise, Isuzu Motors Co Ltd sagged 6.7 percent
after the automaker retained its operating profit and sales
forecast for the year ending March 31.
The broader Topix gained 1.2 percent to 968.50 in
relatively active trade, with 4.12 billion shares changing
hands, less than any day last week.