Japanese stocks made solid gains on Thursday morning, led by exporters such as Honda Motor Co Ltd <7267.T> after the dollar firmed against the yen and Wall Street stocks snapped a five-session losing streak. Honda, Japan's No. 2 auto maker, rose 2.4 percent to 4,690 yen after the dollar firmed by almost one yen overnight, partly on comments by Federal Reserve Chairman Alan Greenspan that the U.S. economy was off to a strong start in 2004. The dollar was fetching around 108.97 yen in late morning, compared to a low of around 108 on Wednesday and a near three-month high around 109.4 earlier in the week. "The rebound in the dollar is certainly a positive for the earnings of big Japanese exporters," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. The Nikkei average <.N225> rose 0.73 percent to 10,736.35 by midsession, adding to its 0.14 percent gain on Wednesday.
The broader TOPIX index <.TOPX> of all first-section issues put on 0.73 percent to 1,054.08. Still, gains were somewhat muted, with worries about the sustainability of the U.S. economic recovery and doubts that there had been any change in the dollar's longterm downtrend keeping many market players cautious. "We're not making any big sector bets, but sticking to companies with strong enough brand power to maintain pricing even in the case of a stronger yen or economic slowdown," said Ogawa, who likes Honda, Toyota Motor Corp <7203.T>, and Canon Inc <7751.T>. The market's upside is also being capped by sporadic selling by banks and financial institutions, who traditionally sell stocks at this time of year to realise profits before closing their books for the end of the financial year on March 31. Many traders see this selling petering out by early March. "In the medium term I'm pretty upbeat on Japanese stocks, I think we'll hit 11,000 by the end of March, once institutional selling related to book-closing has faded out," said Yusuke Sakai, manager of equities at Mizuho Securities.
AUTOS CLIMB
Office equipment and camera giant Canon Inc <7751.T>, which depends on overseas markets for around three-quarters of its revenues, gained 1.35 percent to 5,270 yen. Toyota, Japan's biggest auto maker, put on 1.93 percent to 3,700 yen, helping buoy the transport sector subindex <.ITEQP.T> by 1.84 percent and making it the morning's second-biggest sector winner behind non-bank financials <.IFINS.T>. Takefuji Corp <8564.T>, Japan's biggest consumer finance firm, surged 7.66 percent at 7,730 yen. Traders said the stock was rising after Nomura Securities raised its investment rating on the non-bank sector to "buy" from "neutral". Gainers outnumbered decliners 971 to 373. Trading slowed, with 464.55 million shares changing hands, the lowest morning total this week. The Bank of Japan will announce the results of a one-day policy meeting later on Thursday, at which it is expected to keep its ultra-loose monetary policy unchanged after recent data showing the economy growing at its fastest pace in 13 years.//