March 31, 2014 / 2:35 AM / 4 years ago

Nikkei hits 2-1/2-wk high on China hopes, soft yen spurs exporters

* China stimulus hopes, upbeat U.S. data support
    * Fiscal year-end window dressing may be behind some of the
gains - traders
    * Aeon jumps on low-cost smartphone services plan
    * Nikkei likely to mark 1st quarterly loss since mid-2012

    By Tomo Uetake
    TOKYO, March 31 (Reuters) - Japanese shares climbed 1
percent to a 2-1/2-week high on Monday morning on growing hopes
China would offer stimulus measures to bolster its sagging
economy, with exporters leading the way on a softer yen.
    Traders also suspect buying by fund managers as books close
for the fiscal year-end, though the benchmark Nikkei is
still expected to post its first quarterly decline in 1-1/2
    The benchmark Nikkei advanced to 14,839.54 at the opening,
its highest level since March 13, and was last traded at
14,808.35, 0.8 percent higher on the day.
    "Investors' risk-off stance has receded following U.S. data
and China hopes," said Naoki Fujiwara, chief fund manager at
Shinkin Asset Management. 
    China's Premier Li Keqiang on Friday sought to reassure
jittery global investors that Beijing was ready to support the
cooling economy, saying the government had the necessary
policies in place and would push ahead with infrastructure
    Investors were also encouraged by data showing a rise in
U.S. consumer spending in February, joining a string of upbeat
numbers that suggested the world's biggest economy was picking
up solid momentum. 
    Exporters, particularly automakers, fared well on the weaker
yen, with Nissan Motor Co Ltd, Honda Motor Co Ltd
, Mazda Motor Corp, Fuji Heavy Industries Ltd
, Mitsubishi Motors Corp gaining between 2 and
4.1 percent in heavy trade.
    The yen slipped to 102.98 yen to the dollar on
Friday, its weakest level in two weeks. It was last at 102.80
    "Foreign speculators are buying the futures on expectations
that fund managers would do some window dressing," Shinkin
Asset's Fujiwara added, referring to the buying ahead of the new
fiscal year starting on Tuesday.
    Still, on the quarter, the Nikkei was down 9 percent since
the start of the year and is headed for its first quarterly
decline in 1-1/2 years, hurt by a slowing in Japan's economy,
worries over the tapering of the U.S. Federal Reserve's stimulus
and China's economic woes. 
    The market has also been pegged back by concern that
consumption will be crimped by Tokyo's sales tax hike to 8
percent from 5 percent on April 1. 
    Still, many see the Nikkei's pullback as a necessary
correction after a 57 percent rally last year.
    "While Japan's performance has been negative since the start
of 2014, we view the current phase as a healthy consolidation
phase preparing the stage for a possible up-side breakout,"
wrote Jesper Koll, head of Japanese equity research at
J.P.Morgan, in a note to clients.
    The market largely shrugged off an unexpected fall in 
Japan's factory output for February. 
    Aeon Co Ltd jumped as much as 3.3 percent after the
Nikkei newspaper said the supermarket chain operator will launch
low-cost smartphone services on April 4 priced at less than half
the fees major domestic mobile carriers typically charge.
    The broader Topix added 0.8 percent to 1,196.04 in
moderate trade, with trading volume at 28 percent of the full
daily average for the past 90 days.
    The JPX-Nikkei Index 400, a recently introduced
gauge comprised of companies with a high return on equity and
robust corporate governance, rose 0.9 percent to 10,833.98.    

 (Editing by Shri Navaratnam)
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