Tokyo stocks up near 2% by midday on policy shift
TOKYO, April 24 (Reuters) - Tokyo stocks rose above the 16,000 mark by midday on Friday, as the market was cheered by the Japanese government's decision to emphasise economic recovery over tight spending.
The market mood was also brightened by media reports that a 16 trillion yen economic stimulus package, expected to be announced later on Friday, will include at least 10 trillion yen worth of tax cuts and public works spending.
The key 225-share Nikkei average ended the morning session up 1.88 percent, or 296.05 points, at 16,057.74, after rising as high as 16,103.70 earlier.
Nikkei June futures were up 360 at 16,070.
The broad-based TOPIX index rose 1.66 percent, or 20.23 points, to 1,238.89. The Nikkei 300 was up 1.72 percent, or 4.14 points, at 245.14.
After opening firmer, the benchmark Nikkei moved narrowly for a while before mid-morning comments by Finance Minister Hikaru Matsunaga on permanent tax cuts, which the market believes are necessary for economic recovery, spurred buying, brokers said.
Matsunaga said that the ruling Liberal Democratic Party's tax panel would keep considering permanent tax cuts.
''The comments strengthened buying interest. The market also gave fairly good marks to reported details of the economic package,'' a dealer at a second-tier brokerage said.
A futures trader at a second-tier securities house said: ''Matsunaga's comments were not particularly new, but buying grew after they were made.''
Before the market opened on Friday, Prime Minister Ryutaro Hashimoto said a panel discussing revision of a fiscal reform law approved a delay in the target date for reducing the budget deficit to three percent of gross domestic product to fiscal 2005/06, two years later than had been mandated by the law.
The panel decision paves the way for the government to announce final details of its economic package, which, media reports said will include 7.7 trillion yen worth of public works projects. The media has said that the law was one of the obstacles which prevent the government from deciding on permanent tax reduction.
Despite the advance and improved mood on Friday morning, investors remained cautious over the contents of the economic package and its potential effectiveness, brokers said.
''They want to see a finalised version of the package,'' Tokyo Securities general manager Kunihiro Hatae said.
''The finalised version may have some items that surprise and please the market,'' Okasan Securities chief strategist Tetsuya Ishijima said, adding that investors would also like to see the reaction of overseas financial markets to the package before deciding their own investment stance.
Daiwa Securities deputy general manager Kenji Karikomi said the reported public works spending may only be effective temporarily and may not support a sustainable recovery.
Investors were also unsure whether the fiscal policy change would really allow the government to implement permanent tax cuts, Karikomi said.
First section turnover was 178 million shares against 149 million shares on Thursday morning.
Advancing issues outpaced losing issues 866 to 195, while 148 issues were unchanged.
By sector, gainers were led by shipbuilding, air transport and construction. There were no sectors which fell substantially.
Investors continued to pay close attention to companies' business performances and they are also buying shares of companies which plan or are already implementing share repurchase schemes, brokers said.
.......pray for permanent tax cuts and more dereg
curtis |
