Nikkei ends at eight-week closing high, Sony banks gain

Nikkei ends at eight-week closing high, Sony banks gain

Tokyo: Japan’s Nikkei average rose 1.2% on 2 October, closing above 17,000 for the first time in nearly eight weeks as Sony Corp gained after saying its financial unit had set its IPO price at the top end of its tentative range.

Bank shares rallied as investors bet that the worst of the US subprime-mortgage-related crisis was over, while exporters such as Canon Inc gained due to a rally on Wall Street the previous session and a softer yen.

But shares of KDDI Corp dropped 2.3% to 845,000 yen after the Nikkei business daily said Japan’s No. 2 phone operator would offer a new mobile phone plan that cuts calling charges by about 30 percent but substantially raises handset prices.

“Japanese stocks rise when other global markets go up, but they are unlikely to become a leader because the only domestic factors for pushing stock prices higher are a solid economy and corporate earnings, which have been already largely priced in," said Norihiro Fujito, general manager of Mitsubishi UFJ Securities’ investment research and information division.

The Nikkei’s ceiling for this year will likely be around 18,000, he said, short of this year’s high of 18,300.39, considering uncertainty about the policies of Japan’s new administration.

The Nikkei average rose 200.82 points to finish at 17,046.78. It was the benchmark’s first close above 17,000 since 9 August.

The broader TOPIX climbed 1.5%, or 23.90 points, to 1,639.79, the highest finish since 9 August.

Against the yen, the dollar dipped 0.25% to 115.45 yen.

Trade was moderate, with two billion shares changing hands on the Tokyo exchange’s first section, compared with last week’s daily average of 1.9 billion.

Advancing stocks beat declining ones by a ratio of nearly four to one.

Naoki Koga, senior fund manager at Toyota Asset Management, said financial stocks had been sold too sharply and they are returning to earlier levels, but they are unlikely to keep pushing much higher.

After the market closed, Chubu Electric Power Co. said Hitachi Ltd would bear all the costs for repairing a Hitachi-made nuclear turbine at the No. 5 unit at its Hamaoka plant in western Japan.

Banks rally

Financial shares such as Mitsubishi UFJ Financial Group were firm on rising expectations that the worst of the subprime problems may be over.

Citigroup, the largest US bank by market value, warned on Monday its third-quarter earnings will drop by 60%, but investors took comfort after its chief executive, Charles Prince, said the bank would “return to a normal earnings environment in the fourth quarter".

Mitsubishi UFJ jumped 5.6% to 1,114 yen, while Sumitomo Mitsui Financial Group Inc was up 3.9 percent at 915,000 yen and Mizuho Financial Group Inc climbed 2.6% to 661,000 yen.

Sony advanced 4.3% to 5,890 yen. The company said the sale of shares in its financial unit would boost its pretax profit by 78 billion yen and net profit by 14 billion yen.

Sony has also said it will launch an ultra-thin flat TV in December, the world’s first television based on organic light-emitting diode (OLED) technology. Separately, it said it will form a joint venture with chip maker Qimonda

“It is positive for the stock that Sony will be able to use the money raised from listing the financial arm to invest in OLED and other AV businesses," Mitsubishi UFJ Securities’ Fujito said.

Shares of exporters rose, with Canon up 2.6% at 6,400 yen. Advantest Corp jumped 5% to 3,750 yen and TDK Corp gained 3% to 10,420 yen.

US stocks surged on Monday, sending the Dow to a record close.

Elsewhere, shares of IHI extended sharp losses, losing 6.1% to 264 yen, after plunging 22% in the previous session following a shock loss warning.