Nikkei hits 2-mth high on hopes for 2009, weaker yen

Sun Jan 4, 2009 11:29pm EST
 
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* Nikkei hits 2-month high on hopes for better year

* Weaker yen boosts exporters such as Honda Motor Co

* Resource shares climb as oil surges on Mideast worries

* But market players wary as uncertainties remain (Adds quotes, details)

By Elaine Lies

TOKYO, Jan 5 (Reuters) - Japan's Nikkei average began 2009 on a strong note on Monday, climbing 2.1 percent and hitting a nearly two-month closing high on hopes this year will be better than last, the worst in the Nikkei's history.

Honda Motor Co (7267.T) and other exporters climbed on a weaker yen. Resource-linked firms such as trading houses surged as oil jumped more than 3 percent, after an Iranian military commander reportedly called on Islamic countries to cut oil exports to supporters of Israel over Israel's ground offensive in the Gaza Strip to stop Hamas rocket attacks. [ID:nSP345640]

"Risk aversion has eased in the last week and this has sent both the Dow and the Nikkei higher," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"There's quite a lot of expectations for the government of (U.S. President-elect Barack) Obama and the policies he's likely to enact, but when he actually takes office this mood may evaporate and a lot of problems still linger."

In a half-day of trade that began with a ceremony attended by young women in colourful brocade kimonos, the benchmark Nikkei .N225 gained 183.56 points to 9,043.12, ending above 9,000 for the first time in two months.

Though it gained on its final day of trade on Dec. 30, the Nikkei lost 42 percent for 2008, the worst year in its history.

The broader Topix rose 1.9 percent to 875.91.

U.S. stocks surged on Friday as investors discounted discouraging economic data, including Friday's release showing a sharp contraction in factory activity, with anticipation of a turnaround in the second half of 2009 buoying the market. [.N]

The dollar rallied to a three-week high against the yen on Friday after the strong Wall Street performance encouraged risk appetite. It was fetching around 92.06 yen in Tokyo JPY=.

Market players remained wary despite the surge, with several saying they felt the Nikkei might be a bit too high.

"The reason for the recovery to 9,000 remains hazy right now, and unless we can clarify this during the next few days, hanging on to this level may be tough," said Masayoshi Okamoto, head of dealing at Jujiya Securities.  Continued...

 
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