Japanese stocks closed at a 21-month high on Thursday, bolstered by an extended rally in Mizuho Financial Group Inc <8411.T> and other bank shares on growing hopes of a solid recovery in the economy. But the rise in the Nikkei average <.N225> was checked as steel shares turned lower after earnings forecasts, with industry leader Nippon Steel Corp <5401.T> losing 1.35 percent to 219 yen. Nippon Steel, Japan's biggest steel maker by crude output, more than halved its profit estimate for the year to March 31. That was attributed to anticipated special charges but still dampened sentiment in the sector, which had been expected to benefit from continuing strong demand in China.
The Nikkei finished up 49.87 points or 0.44 percent at 11,401.79, its highest close since June 11, 2002. The broader TOPIX index <.TOPX> ended up 0.42 percent at 1,120.67, also a 21-month high. The Nikkei earlier moved towards a psychological barrier at 11,500, going as high as 11,480.84. Gainers far outnumbered decliners 1,083 to 357 on the first section and volume was the highest since July 3, 2002, with 2.112 billion shares changing hands. "We're aware that sell orders are lined up above the 11,000 level. But the market has absorbed them well," said Kazuyuki Naito, general manager of equities sales at UFJ Tsubasa Securities.
BANKS BEST
Banks were the best performing sector, with the subindex <.IBNKS.T> rising 2.20 percent, helped by recent strong economic data. Japan's economy grew at its fastest clip in 13 years in the final quarter of 2003, while rising private spending suggests the economic upturn is finally filtering down to the domestic sector. Some 17 percent of the total share volume was accounted for by Resona Holdings <8308.T>, Japan's fifth-biggest bank, which has lagged behind its rivals but soared 10.14 percent to 152 yen on Thursday. Mizuho Financial Group Inc <8411.T>, the country's biggest banking group and the most active issue by value, climbed 3.38 percent to 367,000 yen after hitting a record high of 371,000 yen. "More and more investors, including day traders, have joined in a rally on the banking sector since hopes are growing that an economic recovery is firmly on the way," said Tatsuyuki Kawasaki, director of equities trading at Kaneyama Securities. As a result, companies and other operators that traditionally sell towards the end of the Japanese fiscal year on March 31 were holding back for now and waiting to take profits at higher levels, he said. Several car firms and tech exporters were lower as investors assessed the market's recent sharp rises and waited for U.S. jobs data for more signs of improvement in the United States, Japan's biggest trade partner. An update by U.S. chip giant Intel Corp later on Thursday on its business performance was also a reason for caution, analysts said. Canon Inc <7751.T>, a major maker of steppers -- key tools for making semiconductors -- dipped 1.99 percent to 5,430 yen. Electronics parts maker Mitsumi Electric Co <6767.T> slumped 4.61 percent to 1,220 yen a day after the company lowered its earnings forecasts for the year ending on March 31, citing lower-than-expected revenue from game products and falling computer parts prices due to fierce competition.///