Tokyo stocks swing higher amid hopes for Kajiyama
TOKYO, July 16 (Reuters) - Tokyo stocks were higher by Thursday's close, as news former Japan chief cabinet secretary Seiroku Kajiyama might seek the prime ministership fuelled hopes for swift action to revive the country's ailing economy, traders said.
''The news about Kajiyama definitely improved market sentiment,'' said Tsuyoshi Segawa, general manager at New Japan Securities Co Ltd.
The key Nikkei 225 average closed up 117.78 points or 0.71 percent at 16,731.92, reversing an early decline to 16,498.25. September Nikkei futures were up 90 at 16,610.
Liberal Democratic Party (LDP) policy chief Taku Yamasaki quoted an LDP member of parliament as saying on Thursday that Kajiyama might announce his candidacy for the post of head of the ruling party, and thus prime minister, on Thursday.
Another party member said on Thursday that Kajiyama would likely announce on Friday morning his candidacy for the ruling party presidency.
This news contradicted market expectations that Foreign Minister Keizo Obuchi would become Japan's next prime minister, which had weighed on stocks in the morning due to worries about Obuchi's ability to tackle Japan's economic problems.
''With Obuchi, it's business as usual,'' said Martin Foster, a senior analyst at Standard & Poor's MMS. But traders said Kajiyama would pursue more dramatic economic reforms.
''Who will become prime minister is of the greatest interest to the market right now,'' said Ritsu Matsushita, a director at Invesco Asset Management (Japan) Ltd.
He added, however, that selection of prime minister would not significantly alter the long-term outlook for the Nikkei average. ''Risks in the market seem subdued, but the Nikkei 225 will not spike up sharply, with the outlook for Japanese corporate earnings still dismal,'' he said.
The formal selection of the successor to Prime Minister Ryutaro Hashimoto, who is resigning over his party's disastrous showing in elections for the Upper House of parliament last Sunday, will be decided by LDP voting on July 24, three days later than had been planned.
Activity was light with 446 million shares trading on the first section of the Tokyo Stock Exchange (TSE), against 473 million shares on Thursday.
Broader indices also gained ground. The TOPIX index of all first section shares was up 5.42 points, or 0.42 percent, at 1,280.73.
The capitalisation-weighted Nikkei 300 was up 1.08 points, or 0.43 percent, at 253.97.
Late Thursday afternoon, Japan consumer credit firm Lake Co Ltd said it was negotiating with GE Capital Service Corp on selling its business assets to the U.S. financial unit of General Electric Co (GE - news).
The news sparked hopes for more mergers in the industry, cheering consumer credit firms that have gone public. Acom Co Ltd (8572.T) was up 290 at 7,650, Takefuji Co Ltd (8564.Q) was up 110 at 7,500 and Aiful Corp (8515.Q) was up 290 at 7,300. Lake's shares are unlisted.
Blue-chip shares continued to gain ground, as worries over future problems for Japanese stocks eased with a scenario of the LDP succession becoming clearer.
Honda Motor Co (7267.T) shares closed 230 yen higher at 5,500, after briefly reaching as high as 5,530, an all-time high. The shares have been on an uptrend for three weeks.
Sony Corp. (6758.T) closed 250 yen higher at a record-high 13,150. A high-tech rally earlier in the week in New York also added to its rising trend, traders said.
The second-section index was up 2.56 points at 1,359.45, while the over-the-counter (OTC) index was up 2.53 at 792.41.
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