Tuesday February 26, 11:11 pm Eastern Time
Nikkei rises 3 pct on bank, high-tech buy-backs
(UPDATE: Updates to early afternoon, adds background)
By Risa Maeda
TOKYO, Feb 27 (Reuters) - Tokyo's Nikkei average jumped more than three percent on Wednesday afternoon, piercing the psychologically key 10,500 level, bolstered by a rush to buy back bank and high-tech shares.
Resilence by the yen helped to allay fears of foreigners' dumping Japanese shares after the contents of a government economic package, set to be finalised on Wednesday, proved disappointing to the market.
Bank shares advanced on the back of the upturn, while caution ahead of the introduction on March 6 of a tighter price rule on short-selling hastened buy-backs by brokers and institutional investors in oversold tech issues and bank shares.
Short-selling, particularly by foreign hedge funds, has been partly blamed for the sharp decline and wild price fluctuations in the banking sector and share prices in Japan in general.
On Tuesday, the Financial Services Agency (FSA) penalised four foreign brokers for violating existing short-selling rules and said it would step up regulations on selling of borrowed stocks by individual investors.
As of 0343 GMT, the Nikkei was up 3.12 percent or 318.46 points at 10,521.09, rising above the 10,500 level for the first time since January 11.
The broader TOPIX index (^TOPX - news) jumped 20.14 points or 2.05 percent to 1,003.96.
``The market has already moved on (disappointment with) the package because the draft plan was out yesterday,'' said Tatsuyuki Kawasaki, director at Kaneyama Securities' equities trading division.
``A big relief for us was that the package's disappointing draft did not trigger hectic selling of the Japanese currency overnight. The risk of foreign investors' selling on Japan seems to be small for now.''
Trading picked up slightly, with 377.58 million shares changing hands on the first section of the Tokyo Stock Exchange during the morning session, up from 336.53 million on Tuesday morning. Advancers outpaced decliners 990 to 312.
BANKS BOUNCE BACK
``Only two factors were behind today's rally -- the lack of sellers due to the FSA's tighter regulations on short-selling and index-based buying by public pension funds,'' said Hitoshi Ichio, strategist at Commerz Securities.
Traders said public pension funds were probably trying to support the market ahead of the much-awaited announcement of the government's economic package.
The government's Council on Economic and Fiscal Policy is set to meet after the market closes on Wednesday to finalise the plan.
The Tokyo share market fell the previous day as investors factored in a lack of fresh steps in the government's anti-deflation package, an outline of which was unveiled on Tuesday.
In the draft, the government merely repeated its official line, saying it would take all necessary steps, including capital reinforcement of banks, if the threat of a financial crisis emerged.
Banks wiped out most of Tuesday's losses, with Mizuho Holdings , the world's biggest bank by assets, leading its peers higher.
Mizuho climbed 8.81 percent to 248,000 yen and Mitsubishi Tokyo Financial Group (MTFG), Japan's third-biggest banking group, gained 3.98 percent to 809,000 yen.
The Bank of Japan's (BOJ) Policy Board meets on Thursday, and the central bank is widely expected to discuss ways to help the government achieve its goal of stemming a three-year fall in prices.
PIONEER SOARS
In the technology sector, Mitsubishi Electric Corp , Japan's third-largest cellphone maker, soared 7.08 percent to 469 yen, adding to the previous day's 4.29 percent rally.
Mitsubishi had lagged behind several other chip-related issues, which gained momentum earlier this month after North American data suggested an improvement in the global chip market.
Shares in electronics maker Pioneer Corp advanced 7.11 percent to 2,635 yen on a report that its net profit for 2002/03 could jump 68 percent due to new models of plasma display panels and DVD players.
The Nihon Keizai Shimbun business daily said Pioneer was expected to post a group net profit of 16 billion yen ($118.8 million) for the year that starts in April, compared with Pioneer's forecast of 9.5 billion yen for the year ending on March 31.
Tokyu Construction Co Ltd climbed 10.94 percent to 71 yen after the debt-ridden builder said on Wednesday morning it would receive 50 billion yen in capital-bolstering aid from parent company Tokyu Corp .
The market is keeping a close eye on ailing firms that have been hit hard by falling prices and tightened credit by banks, trying to decide which ones will survive and how they can improve businesses.
Daiei Inc , Japan's biggest and most heavily indebted supermarket operator, was down 1.9 percent at 103 yen ahead of the unveiling of a revamped three-year revival plan later in the day. |
