TOKYO Japan's Nikkei average rose on Thursday to end just below the key 9,000 mark on mounting expectations of fresh stimulus from the U.S. Federal Reserve, with big gains for shippers and Apple suppliers buoying the market.
Investors covered bearish bets ahead of the Fed decision later in the day as they wait to see if it will launch another round of bond-buying to kick start a flagging economic recovery in the United States.
Battered shippers .ISHIP.T were the best sectoral performer, up 5.5 percent, while heavily shorted Nippon Sheet Glass Co Ltd (5202.T) climbed 5.2 percent.
"Anything with big shorts out there were reaping today," a senior dealer at a foreign bank said. "It's basically squaring up in case something does come out of that."
The Nikkei .N225 advanced 0.4 percent to 8,995.15, but faced resistance at its 200-day moving average at 8,998.64.
Expectations of a third round of quantitative easing have grown since last Friday's disappointing U.S. jobs data. Fed Chairman Ben Bernanke, who framed employment concerns as a justification for further stimulus in a speech last month, will hold a news conference at 1815 GMT, while a statement on interest rate policy will be released at 1630 GMT.
Some market participants were concerned that further U.S. stimulus would weigh on the dollar against the yen, hurting Japanese exporters.
The first round of quantitative easing from the Fed helped the Nikkei surge 23 percent in the subsequent three months, and it climbed nearly 12 percent for the same period after the second dose of stimulus.
But the yen is much higher now, hitting a seven-month high of 77.651 yen against the dollar on Thursday. That compares with a level of around 95 yen to the dollar in the three months after the first QE and around 80-84 yen for the same period after the second round.
The Nikkei is up 6.4 percent so far this year, underperforming a 14.2 percent rise in the U.S. S&P 500 .INX and a 11.6 percent gain in the pan-European STOXX Europe 600 .
"(The QE3) will be good for the global economy, obviously for United States in particular. The market will be in the phase of the so-called 'risk-on' again," said Hidehiro Tomioka, head of equity investment at Manulife Asset Management in Tokyo.
"The (Japanese) market is sort of in the low range of a trading range, so I think there is room for the market to go up."
The broader Topix .TOPX index added 0.3 percent to 744.23 on Thursday. Nearly 1.29 billion shares changed hands, down from Wednesday's 1.55 billion and last week's average of 1.61 billion.
In terms of valuations, the Topix carries a 12-month forward price-to-book ratio of 0.82, way below the S&P 500's 1.93 and the STOXX Europe 600's 1.33, according to Thomson Reuters Datastream.
AN APPLE A DAY
Thursday's rise was also partly driven by gains in Apple Inc (AAPL.O) component suppliers after the iPhone maker launched its latest smartphone.
Meiko Electronic Co Ltd 6787.OS, Taiyo Yuden Co Ltd (6976.T), Murata Manufacturing Co Ltd 6981.OS, Foster Electric Co Ltd (6794.T) and Mitsumi Electric Co Ltd 6767.T were up between 2.3 and 10.7 percent.
TDK Corp (6762.T) advanced 3.7 percent, with traders saying the hard-disk drive and electronic parts maker makes Wi-Fi modules, batteries and inductors for Apple.
Industrial robot maker and index heavyweight Fanuc Corp (6954.T), whose clients traders said include Hon Hai Precision Industry (2317.TW), an Apple supplier, gained 1.8 percent.
Social network companies DeNA Co Ltd (2432.T) and Gree Inc (3632.T) surged 6.3 and 7.2 percent respectively, boosted by a price target hike for DeNA from Nomura. DeNA was the most-traded stock on the main board by turnover, followed by Gree.
Sentiment for the industry was also lifted after Apple updated its operating system on the iPhone with an embedded Facebook application, lifting Facebook Inc (FB.O) 7.7 percent.
(Additional reporting by Sophie Knight; Editing by Edwina Gibbs)