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Nikkei reaches 7-month closing high on China data, weak yen
December 3, 2012 / 7:30 AM / 5 years ago

Nikkei reaches 7-month closing high on China data, weak yen

* Nikkei breaches the 9,500-mark for first time since April
    * Futures-driven trade may continue - analysts
    * Construction firms up on repair work expectations
    * Nikkei up 11.9 percent year-to-date

    By Ayai Tomisawa
    TOKYO, Dec 3 (Reuters) - Japan's Nikkei share average edged
up to a seven-month closing high on Monday, helped by futures
buying as a weaker yen and improved Chinese manufacturing data
encouraged investors.
    At one point, the Nikkei climbed above the
psychologically important 9,500-mark for the first time since
April 27.
    For the day, it closed up 0.1 percent at 9,458.18 after
rising as high as 9,525.82, or 0.8 percent.
    Analysts said that while sentiment remains positive,
investors who have bought bellwether exporters on expectations
that their earnings will benefit from a weak yen might not add
long positions this week as they focus on coming U.S. economic
data such as a jobs report.
    Takuya Takahashi, an analyst at Daiwa Securities, said there
is a sense of achievement after the index reached the
9,500-level. But now, he added, many investors "are expected to
stay on the sidelines for some time" awaiting economic
indicators and the Dec. 16 election for Japan's lower house.
    During the past 2-1/2 weeks, the benchmark has rallied 9.2
percent, led by exporters, and the yen has fallen on speculation
the Bank of Japan will be pushed to adopt aggressive policy
action after the Dec. 16 election. The Nikkei gained 5.8 percent
in November, its best monthly performance since February.
    The leader of the main opposition Liberal Democratic Party,
Shinzo Abe, has been calling for the Bank of Japan to take
bolder action, including setting a 2 percent inflation target
and embarking on "unlimited easing". The LDP is expected to win
the most seats and form the government after the election.
    
    FUTURES BUYING MAY LEAD THE MARKET
    While investors may not add new long positions in cash
trade, foreign investors may still buy futures, market players
said. But they added that investors tend to be quick to take
profits so the index may be swayed by such moves.
    "Even if the Nikkei briefly touches the 9,700-level, it
probably won't last as investors are likely to unwind their
large futures positions quickly after chasing the market
higher," said Makoto Kikuchi, the chief executive officer at
Myojo Asset Management.
    On Monday, some exporters remained in demand, with Canon Inc
, Ricoh Co Ltd and Nissan Motor Co up
between 1.0 and 2.7 percent.    
    The currency was quoted at 82.37 yen to the dollar on Monday
after falling as low as 82.75 yen on Friday which was near a
7-1/2-month low of 82.84 touched on Nov. 22.
    A rise in China's official purchasing managers' index to a
seven-month high of 50.6 in November from 50.2 in October lent
support to the Japanese market as China is the country's top
export market. 
    
    CONSTRUCTION FIRMS BOOSTED
    Construction machinery makers Komatsu Ltd and
Hitachi Construction Machinery Co Ltd, which have
significant exposure to China, advanced 0.4 and 1.6 percent,
respectively.
    Traders said they were also boosted by expectations of
repair works on Japan's transport infrastructure, after a tunnel
on a major highway in central Japan collapsed on Sunday. Local
media said nine people were killed.
    Japan Bridge Corp surged 26 percent, P.S.
Mitsubishi Construction Co Ltd jumped 21 percent and
Hazama Corp climbed 15 percent.
    The benchmark Nikkei is up 11.9 percent this year, near to
the 12.6 percent rise in the U.S. S&P 500 and 12.8
percent gain in the pan-European STOXX Europe 600.
    But Japanese equities carry a 12-month forward price-to-book
ratio of 0.9, much cheaper than the S&P 500's 1.9 and the STOXX
Europe 600's 1.4, data from Thomson Reuters Datastream showed.
    The broader Topix was flat at 781.73. Volume on the
main board was light, with 1.86 billion shares changing hands,
compared with last week's average daily volume of 2.01 billion
shares.

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