Tokyo: The Nikkei rose nearly 2% on Friday, 31 August, extending earlier gains as news that President George W. Bush will outline reforms to help homeowners with subprime mortgages sparked buying of stocks across the board.
Strong earnings from Dell Inc and a fall in the yen also helped blue-chip exporters such as Sony Corp and Canon Inc
Paper firm Rengo Co Ltd rose after the Nikkei business daily reported that it would integrate its cardboard production with that of Japan’s second-biggest paper maker Nippon Paper Group Inc.
The market was propelled up after the news that Bush will outline reforms on Friday intended to help homeowners with subprime mortgage avoid default.
“Investors took this news favourably,” said Tatsuyuki Kawasaki, general manager at Mirai Securities.
“It would be a different story though if the Fed decided not to cut interest rates as a result,” he added.
The Nikkei advanced 1.93% or 312.40 points to 16,466.22 as of 0432 GMT. The broader TOPIX index gained 1.72% to 1,595.27.
Sony surged 4.9% 5,550 yen and Canon added 2.5% to 6,570 yen as the dollar traded at around 116.20 yen keeping its distance from a 14-month low of 111.60 yen struck two weeks ago.
Tsuyoshi Nomaguchi, a strategist in Japanese equity research at Daiwa Securities Co Ltd, said strong earnings at Dell, the world’s second-largest personal computer marker, encouraged investors to chase technology stocks.
“High-tech companies after all are less likely to be affected by the subprime problems,” he said. “Investors may have started to think they can have a go at technology stocks.”
Shares of Fujitsu Ltd gained 6.5% to 792 yen after the electronics conglomerate said on Thursday that Tokyo District Court upheld its complaint of dynamic random-access memory patent infringement against the Japan unit of Taiwan’s Nanya Technology Corp
In the pulp sector, Rengo rose 6.6% to 716 yen, while Nippon Paper edged up 2.9% to 388,000 yen. Rival Oji Paper Co rose 0.9% to 570 yen.
Chances of further megers in the sector lifted other paper stocks, with Mitsubishi Paper Mills Ltd up 1.7 percent at 242 yen.