June 14, 2013 / 1:21 AM / in 5 years

Nikkei rebounds, buoyed by robust U.S. data

* Nikkei rises 1.9 pct, Topix up 1.7 pct in active trade
    * Nikkei still holds below Ichimoku cloud in bearish sign
    * Volatility remains elevated

    By Dominic Lau
    TOKYO, June 14 (Reuters) - Japan's Nikkei average jumped 1.9
percent on Friday, recovering some of the previous session's
sharp fall, as robust data eased concerns over whether the U.S.
economy can withstand a pullback in stimulus by the Federal
    "People are unwinding (short) positions, or people are
trying to buy on dips. The market did rebound and the U.S. did
well so people are buying on the back of that," a senior dealer
at a foreign bank said.
    U.S. stocks rallied overnight after retail sales rose more
than expected in May and first-time applications for
unemployment benefits fell last week, in signs of economic
    The senior dealer said buy orders outpaced sell orders by
three to one and there was a good balance between long-only
investors and hedge funds, although long-only players were a bit
more active.
    "For the time being, the Nikkei is trying to find itself
where it should be after the crazy opening," he said, referring
to Nikkei June futures and options contracts settlement, known
as "special quotation".
    The Nikkei was up 238.31 points at 12,683.69 after
trading as high as 12,889.46, though it was still holding below
the Ichimoku cloud in a bearish sign. 
    On Thursday, the Nikkei tumbled 6.4 percent to its lowest
close since April 3, the day before the Bank of Japan unveiled
sweeping stimulus to revive the economy, and below the Ichimoku
cloud for the first time since mid-November. It also took the
slide from a 5-1/2-year peak hit on May 23 to nearly 22 percent,
slumping into a bear market and wiping about $700 billion off
the Nikkei's market capitalisation.
    Over the past three weeks, trading in the Nikkei has been
volatile. The 30-day implied volatility for the benchmark jumped
to 42.3 percent on Thursday, its highest since March 2011
earthquake and tsunami, according to Thomson Reuters Datastream.
    Investors, mainly hedge funds, have been cutting their long
Japanese equities and short yen positions on concerns that the
Fed will roll back its stimulus and after the Nikkei had rallied
more than 80 percent from mid-November to that multi-year high.
    Beaten-down real estate companies were in demand
on Friday, up 4.2 percent, while securities firms 
rose 2.4 percent, with Nomura Holdings, Japan's top
brokerage, up 2.2 percent.
    The broader Topix index was up 1.7 percent at
1,062.25 by mid-morning, with volume at 43 percent of its full
daily average for the past 90 trading days.
    The sell-off has taken Japanese equities' valuations,
measured by the 12-month forward price-to-earnings, to 14.1 from
a three-year high to 16.3 touched two weeks ago, Datastream
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