April 25, 2013 / 3:36 AM / 5 years ago

Nikkei inches up to near 5-yr highs on weak yen; Canon, Nintendo sag

* Weak yen trend underpins market
    * Canon, Nintendo suffer as investors disappoint with
    * Shiseido falls after writing down $1.9 bln U.S.

    By Tomo Uetake
    TOKYO, April 25 (Reuters) - Japan's Nikkei share average
inched up to a near five-year high on Thursday, but the mood was
tempered by sharp losses for Canon Inc and Nintendo Co
Ltd as they failed to meet investors' expectations of
strong earnings guidance.
    Market analysts had expected Japanese companies to
aggressively raise earnings guidance after the yen weakened
nearly 15 percent this year, driven by bold government and
central bank policies to revive growth. 
    The yen last traded at 99.39 to the dollar.
    The Nikkei added 0.2 percent to 13,869.92 after
trading as high as 13,906.76, its highest level in nearly five
years, helped by a weak yen and gains for some exporters. The
index jumped 2.3 percent on Wednesday.
    Data from the Ministry of Finance showed that foreign
investors were net sellers of Japanese equities last week, with
a net outflow of 27.9 billion yen after they bought 1.57
trillion yen of stocks in the week before. 
    "The weekly data on foreign investors' capital flow, which
was released just before the opening bell, has dampened the
market's upward momentum," said Kenichi Hirano, market analyst
at Tachibana Securities.
    Canon Inc sank 6 percent, retreating from a
one-year high, after the camera-and-printer maker lifted its
annual operating profit forecast by nearly 10 percent to 450
billion yen ($4.5 billion), but below a market consensus of 510
billion yen.
    It was the second top-weighted loser and the fourth-most
traded stock on the main board by turnover.
    Rival Nikon Corp eased 2.2 percent.
    A sales trader said the selling was linked to earnings, but
added that it was a short term phenomenon.
    "On a longer term basis, the conclusion is that yen FX
weakness is helping," he said.
    Gains in Toyota Motor Corp, Honda Motor Co
, TDK Corp and Suzuki Motor Corp 
helped underpin the Nikkei. They were up between 1 and 1.3
    The benchmark Nikkei has rallied 60 percent since
mid-November, when Shinzo Abe, who became prime minister in
December, promised expansionary monetary and fiscal policies to
revive the world's third-largest economy. 
    Nintendo Co Ltd also suffered, down 8 percent
despite the maker of home video games lifting its forecast for 
an operating profit of 100 billion yen after two years of
    The broader Topix index gained 0.3 percent to
1,167.87, with volume at 70 percent of its full daily average
for the past 90 trading days.
    Shiseido Co Ltd was the fifth top-weighted loser in
the Nikkei, down 3.4 percent after the cosmetic company forecast
its first net loss in eight years after saying it would write
down the $1.9 billion acquisition of U.S. Bare Escentuals due to
disappointing sales.        
    Analysts said, however, investors remained upbeat on the
outlook for Japanese stocks.
    "Dollar strength is a headwind for emerging markets equities
and we would use a bounce to reduce exposure further. Japan is
our favourite equity market," Trevor Greetham, director of asset
allocation at Fidelity Worldwide Investment, wrote in a note.
    "Japan benefits from dollar strength and it has very
positive domestic policy settings from an equity investors'
point of view."
    In terms of valuations, Japanese equities carry a 12-month
forward price-to-earnings ratio of 14.9, a level not seen since
June 2010 but is still below its 10-year average of 16.3,
according to Thomson Reuters Datastream.

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