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Nikkei jumps to near 3-week high; Fed euphoria lifts cyclicals
September 14, 2012 / 3:15 AM / in 5 years

Nikkei jumps to near 3-week high; Fed euphoria lifts cyclicals

* Cyclicals gain as Fed stimulus steps boost risk appetite
    * Hitachi rises after lifting H1 dividend
    * Seven & I slips on concerns of weaker outlook
    * Nikkei up 3 pct this wk, set for 2nd straight wk of gain

    By Dominic Lau
    TOKYO, Sept 14 (Reuters) - Japan's Nikkei average climbed
1.5 percent on Friday to above 9,000, its highest level in
nearly three weeks, after bold plans for stimulus from the U.S.
Federal Reserve boosted risk appetite and lifted beaten-down
cyclical stocks.
    Miners and shippers, which have a relatively higher
correlation with the health of the global economy, rallied the
most. The mining sector jumped 4.7 percent, shippers
 rose 4.5 percent and steelmakers gained
3.5 percent.
    By the midday break, the Nikkei advanced 138.29
points to 9,133.44 in heavy volume, breaking above its 200-day
moving average at 9,002.87 and the 23.6 percent retracement of
its rally from July 25 to Aug. 20 at 9,012.
    A senior dealer at a foreign bank said buy orders were
outnumbering sell orders "between 2 and 2.5 to 1".
    "A decent amount of flow, I would say ... not much hedge
fund money but long-only primarily," he said, adding that
currency moves, including the potential for intervention, remain
a key concern.
    "Japan is going to continue to underperform so long as the
currency strengthens. The open question is whether the Bank of
Japan is going to step in and actually does something to the
currency."
    He said the other question was whether the BOJ would follow
its U.S. and European counterparts to offer further monetary
easing at its meeting next week.
    Japan's government cut its assessment of the economy for a  
second straight month on Friday and warned that growth is
pausing, signalling growing concern over the pain from the
global slowdown and keeping the BOJ under pressure to provide
further monetary stimulus. 
    The Nikkei is up 3 percent this week, set for a second
straight week of gains. For the year, it is up 8 percent,
underperforming a 16.1 percent gain in the U.S. S&P 500 
and an 11.4 percent rise in the pan-European STOXX Europe 600
.
    The first round of quantitative easing from the Fed helped
the Nikkei surge 23 percent in the subsequent three months, and
it climbed nearly 12 percent for the same period after the
second dose of stimulus.
    But the yen is much higher now, hitting a seven-month high
of 77.13 yen against the dollar on Thursday. That compares with
a level of around 95 yen to the dollar in the three months after
the first QE and around 80-84 yen for the same period after the
second round.
    A stronger yen, which was quoted at 77.587 on Friday, is
usually a negative factor for exporters as it eats into profits
earned abroad.
    
    EXPORTERS JOINING THE PARTY
    On Friday, shares in many exporters were taking part in the
rally. Toyota Motor Corp rose 0.8 percent, Honda Motor
Co added 0.7 percent and Canon Inc was up 3.5
percent.
    The broader Topix index rose 1.3 percent to 754.12,
with 88 percent of its full daily average volume for the past 90
days by the end of the morning session.
    Jun Yunoki, equity analyst at Nomura Securities, said
domestic retail investors were likely to step up their selling
because they needed to repay their margin borrowings. 
    "If the market goes up, they will strengthen their selling
because as the market goes up, they can lock up profits," he
said. "They will be buying late in the rally ... They won't push
the market higher but will be the support." 
    Hitachi Ltd added 2.8 percent after Japan's biggest
industrial electronics company said it would increase its
first-half dividend to 5 yen per share from 3 yen a year
earlier.
    Other gainers included Japan's top investment bank Nomura
Holdings, up 3.5 percent after it said it had
restructured the management team at its U.S. equities group,
which comes a week after it announced a plan to scale back its
traditional stock trading businesses worldwide.
    But convenience store operator Seven & I Holdings Co Ltd
 fell 1.3 percent after the Nikkei business daily said
the company's operating profit for March-August would likely
fall 2 percent to 147 billion yen ($1.9 billion), marking its
first decline for the period in three years.

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