Nikkei hits 15-month closing high; JAL tumbles
Japan's Nikkei stock average climbed to a 15-month closing high as resource and machinery shares gained after China reported record imports of some commodities and stronger-than-expected exports, bolstering hopes for the global economy.business Updated: Jan 12, 2010 13:25 IST
Japan's Nikkei stock average climbed to a 15-month closing high on Tuesday as resource and machinery shares gained after China reported record imports of some commodities and stronger-than-expected exports, bolstering hopes for the global economy.
Some large bank shares dipped on concern about exposure to ailing Japan Airlines Corp, while shares of Fast Retailing, which runs the Uniqlo chain of budget clothing stores, fell 5 percent after Goldman Sachs said the firm's recent earnings forecast upgrade had been largely priced in.
Shares of JAL were untraded due to a flood of sell orders at 37 yen, finishing down 44.8 percent from Friday's close after Japanese media said the carrier was still short of the two-thirds support it needs from retirees to cut pension payouts, raising the prospect its pension fund will be dissolved in step with a bankruptcy filing.
Analysts said investor wariness about what would happen had weighed on the benchmark during morning trade.
"There were a lot of people earlier today waiting to see what would happen with JAL, but in the afternoon hope for strong demand from markets like China has helped boost shares from resources to machinery stocks," said Noritsugu Hirakawa, a strategist at Okasan Securities.
"We're also starting to see a lot of large-cap shares getting a boost on hopes for their quarterly earnings, which start coming out later this month."
But others said that good earnings were mainly factored in and that short-covering was behind the rise after the benchmark Nikkei had lagged other share indexes in their rallies last year, noting the strong gains made by large-cap blue chips such as Sony Corp
"We're also seeing a bit of a boost from a slight yen weakening," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
The dollar edged up 0.2 percent to 92.24 yen.
The benchmark Nikkei rose 0.8 percent or 80.82 points to close at 10,879.14, its highest since October 2008.
The broader Topix gained 1.4 percent to 954.13.
Shares of trading house Mitsubishi Corp and other firms that benefit from demand for natural resources gained after strong trade data in China showed booming demand for oil and copper and helped boost commodity prices.
Resource-related stocks gained after gold prices rose more than 1 percent on Monday, scaling a five-week high of $1,161.50 per ounce, on the back of dollar weakness as traders bet on U.S. interest rates staying low in the immediate future.
Mitsubishi Corp rose 2 percent to 2,478 yen and fellow trader Mitsui & Co gained 3 percent to 1,457 yen.
Machinery stocks climbed following gains in U.S. peers such as construction machinery maker Caterpillar Inc after the China data.
Among makers of earth-moving machinery, Komatsu Ltd advanced 5.4 per cent to 2,096 yen and Hitachi Construction Machinery Co climbed 2.2 per cent to 2,566 yen.
JAL spent the day untraded and overwhelmed with sell orders. A source with knowledge of the matter also said that a state-backed fund crafting a restructuring plan for JAL is leaning towards a delisting of the carrier after it files for bankruptcy.
Mizuho Financial Group, Japan's second-largest lender, fell 1.7 per cent to 177 yen and Sumitomo Mitsui Financial Group lost 0.9 per cent to 2,875 yen on worries about both banks' exposure to JAL.
But another JAL creditor, Mitsubishi UFJ Financial Group, rose 2.1 per cent to 488 yen.
All Nippon Airways, Japan's second-largest airline, climbed 4.2 per cent to 295 yen in expectations of increased business in the wake of a JAL restructuring, a market player said.
Shares of Central Japan Railway jumped 4 per cent to 674,000 yen after Nomura Securities said that the stock is the most likely candidate to be added from the transportation and utilities sector if JAL gets delisted.
Trade was active on the Tokyo exchange's first section, with 2.5 billion shares changing hands, above last week's daily average of 2.1 billion.
Advancing stocks outnumbered declining ones by nearly 3 to 1.