*Nikkei rises 1.4 percent to one-week closing high
*Gains limited as investors wait to see US rescue plan impact
*Energy shares climb after oil prices up sharply (Adds stocks and comments)
By Taiga Uranaka
TOKYO, Sept 22 (Reuters) - The Nikkei average climbed 1.4 percent to a one-week closing high on Monday, buoyed by financial shares on hopes for the $700 billion bank bailout proposed by Washington over the weekend to tackle the financial crisis.
Nomura Holdings (8604.T: Quote, Profile, Research, Stock Buzz) shot up more than 9 percent on news that it has bid for both the Asian and European operations of Lehman Brothers LEHMQ.PK, while GS Yuasa Corp (6674.T: Quote, Profile, Research, Stock Buzz) plunged after the car battery maker said it had found improper accounting at a subsidiary.
The market pared some earlier gains as investors locked in profits from recent sharp rises before a national holiday in Japan on Tuesday.
Market participants said the steep recovery seen in late March following the near collapse of Bear Stearns is unlikely this time around given the sheer scale of damage and rescue efforts on Wall Street.
"The storm has subsided. Now, we need to see how much damage was done," said Hitoshi Yamamoto, CEO of Fortis Asset Management Japan.
"I think all the measures the U.S. government and the Fed can take have been put on the table, and investors are waiting to see their effectiveness as well as the burden on the U.S. economy," he said.
The Bush administration and Congress ramped up talks on Sunday on an unprecedented $700 billion bank bailout as they battled the clock to prevent further financial market turmoil that risks pushing the economy into a deep and damaging recession. [ID:nN21470189]
The benchmark Nikkei average .N225 ended up 169.73 points at 12,090.59. The Nikkei ended Friday up 3.8 percent, though it shed 2.4 percent for the week.
The broader Topix gained 1.7 percent to 1,168.69.
Masayoshi Okamoto, head of dealing at Jujiya Securities, said the market's recovery might be held in check as investors turn their attention to Japanese corporate earnings, with firms expected to give updates on their full-year outlooks when they report first-half results.
"The market's rebound could be smaller than expected if many companies cut their outlooks amid the global economic slowdown, and I think such a view was already reflected in today's market," he said.
BANKS UP
Japan's top lender Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) climbed 4.2 percent to 898 yen and No.2 Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) gained 2.9 percent to 460,000 yen.
Nomura jumped 9.6 percent to 1,430 yen after two financial industry sources told Reuters that Japan's largest brokerage has bid for both the Asian and European operations of U.S. investment bank Lehman Brothers LEHMQ.PK. [ID:nT112507]
Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) jumped 5.1 percent to 3,500 yen, becoming the top positive contributor to the Nikkei, followed by industrial robot maker Fanuc Ltd (6954.T: Quote, Profile, Research, Stock Buzz), which rose 3.6 percent to 8,640 yen.
GS Yuasa plunged 19 percent, or by the daily limit of 100 yen, to 427 yen after the car battery maker said it had found improper accounting at a subsidiary, which had booked fictitious transactions.
The firm said it had found some 7.5 billion yen ($70 million) so far in questionable bookings in its accounts receivable.
Inpex Holdings (1605.T: Quote, Profile, Research, Stock Buzz) and other energy-linked stocks surged after U.S. crude oil steadied above $104 a barrel on Monday after surging more than 6 percent on Friday. [O/R]
Oil and gas field developer Inpex shot up 9.7 percent to 1.04 million yen.
Trade was light on the Tokyo exchange's first section, with 2 billion shares changing hands, below last week's daily average of 2.5 billion.
Advancing stocks outpaced declining ones by 846 to 779. (Editing by Chris Gallagher)
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