February 27, 2019 / 6:53 AM / 6 months ago

Nikkei ends higher as defensive stocks rally

* Pharma, real estate and construction sectors outperform

* Miraial soars after raising profit, dividend outlooks

By Daniel Leussink and Ayai Tomisawa

TOKYO, Feb 27 (Reuters) - Japan’s Nikkei closed up on Wednesday as investors bought into defensive stocks such as pharmaceutical and real estate firms, and took some money off the table from machinery shares that had rallied on progress in U.S.-China trade talks.

The Nikkei share average gained 0.5 percent to 21,556.51, not far from its more than 10-week high reached during Tuesday’s session.

The broader Topix added 0.2 percent to 1,620.42, with advancing issues outnumbering declining ones 1,153 to 893.

The pharma, construction and real estate sectors outperformed, rising 1.7 percent, 1.3 percent and 1.0 percent, respectively.

“Shares that had been pressured on worries about U.S.-China trade disputes were bought back early this week, so there seems to be profit-taking going on,” said Takashi Ito, an equity market strategist at Nomura Securities.

“Instead, they are picking up companies which rely on domestic demand.”

Pharmaceutical maker Daiichi Sankyo jumped 3.7 percent and Takeda Pharmaceutical rallied 2.1 percent.

Real estate firms Mitsui Fudosan and Mitsubishi Estate added 1.7 and 1.2 percent, respectively, while construction company Obayashi Corp rose 2.1 percent.

Ito said investors are awaiting developments in the U.S.-China trade negotiations, while also adjusting their positions in line with the recent cautious policy stance of the U.S. Federal Reserve.

On Tuesday, Fed Chairman Jerome Powell told the U.S. Senate Banking Committee that the central bank would remain “patient” in deciding on further interest rate hikes.

It said the dollar “tends to be pressured in this environment so the market is increasingly paying attention to the risk that the yen will strengthen. This situation makes investors want to buy domestic-demand sensitive stocks.”

Wednesday’s losers included companies with high exposure to the Chinese market, which had rallied after President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods.

Factory automation equipment maker Keyence Corp declined 1.2 percent, Yaskawa Electric shed 2.4 percent and machinery maker Komatsu Ltd fell 1.3 percent.

Semiconductor products maker Miraial jumped 6.4 percent after it raised its net profit outlook to 1.25 billion yen from 950 million yen for the year ended January. It also raised its annual dividend payout forecast to 30 yen per share from 20 yen. (Editing by Shri Navaratnam and Richard Borsuk)

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