February 27, 2019 / 2:47 AM / 20 days ago

REFILE-Nikkei up as defensive stocks rally, Sino-U.S. trade talks in focus

(Refiled to make day in the first line Wednesday, not Tuesday)

* Pharma, real estate and construction sectors outperform

* Miraial soars after raising profit, dividend outlooks

By Ayai Tomisawa

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

The Nikkei share average gained 0.5 percent to 21,555.90 in midmorning trade. The broader Topix added 0.2 percent to 1,620.95.

The pharma, real estate and construction sectors outperformed, rising 1.4 percent, 1.2 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.”

Daiichi Sankyo jumped 3.4 percent, Takeda Pharmaceutical rallied 2.7 percent, Mitsui Fudosan gained 2 percent, Mitsubishi Estate added 1.2 percent and Obayashi Corp rose 1.8 percent.

Ito said investors are awaiting more developments on 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 a U.S. Senate Banking Committee that the central bank would remain “patient” in deciding on further interest rate hikes.

“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,” Ito said.

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. Keyence Corp shed 1.7 percent, Yaskawa Electric declined 2.1 percent and Komatsu Ltd fell 1.9 percent.

Semiconductor products maker Miraial jumped 8.6 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 per share. (Editing by Shri Navaratnam)

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