Tokyo's Nikkei average was hovering near a 32-month high by mid-afternoon on Wednesday with investors chasing banks and brokerages amid growing optimism over a steady recovery by Japan's economy. But gains were limited as Kyocera Corp <6971.T>, Sony Corp <6758.T> and several other high-tech issues wilted after a softer finish in their U.S. peers overnight. Investors showed little reaction to an announcement by Moody's raising its rating on Japan's foreign currency government bonds to Aaa from Aa1, although the action sent the yen higher against the dollar. The yen was around 105.75 yen in mid-afternoon, up from 106 yen before the Moody's announcement, which came out shortly after noon.
Moody's left its rating on the Japanese government's domestic debt unchanged at A2 and said the outlook remained stable. "The Moody's news had little impact on the stock market because it was pretty much expected that rating agencies would start raising Japan's outlook given growing signs of economic recovery," said Yoshihiko Kosuga, an equities deputy general manager at Mizuho Investors Securities. Others said domestic institutional investors, who were seeking a chance to buy stocks on dips, seem to be returning to the market following a fall earlier in the day. The Nikkei <.N225> was up 0.09 percent at 12,090.90 at 0417 GMT. It fell as low as 12,001 in the morning session as investors cashed in gains on technology stocks after the Nikkei's rise of nearly 400 points in the past three sessions. On Tuesday, the Nikkei closed up 1.02 percent at 12,079.70, ending above 12,000 for the first time since August 8, 2001. The broader TOPIX index <.TOPX> added 0.11 percent to 1,210.72 by mid-afternoon. Mizuho Financial Group Inc <8411.T>, Japan's biggest banking group, rose 3.92 percent to 504,000 yen. On Tuesday, its shares rallied 6.8 percent after Goldman Sachs said it saw fair value for Mizuho at 613,000 yen and for UFJ Holdings Inc <8307.T> at 1.09 million yen.
UFJ's shares tacked on 3.66 percent to 737,000 yen, adding to Tuesday's 6.28 percent jump. Bank of Yokohama Ltd <8332.T>, Japan's largest regional bank, was up 1.2 percent at 674 yen after Goldman Sachs upgraded its rating to "Outperform" from "In Line" and set a fair value estimate at 715 yen. The bank sector's subindex <.IBNKS.T> rose 1.45 percent, and was the second-biggest gaining sector so far. Daiwa Securities Group Inc <8601.T>, Japan's No.2 brokerage, added 2.09 percent to 927 yen on views that the recent pick up in market activity would help it boost sales. Other notable gainers include Seiko Corp <8050.T>, which rallied 7.95 percent to 665 yen. Japan's second-largest watch maker was briefing on revised earnings forecasts for the year ended March 31 at 2 p.m. (0500 GMT). But Kyocera, the world's largest maker of the ceramic casings that house microchips, dropped 2.32 percent to 9,250 yen after ending Tuesday at a 22-month high. Consumer electronics giant Sony fell 1.55 percent to 4,450 yen. Tokyo Electron Ltd <8035.T> was down 0.54 percent at 7,350 yen, poised to snap a three-day, 7.7 percent rally. The fall came even though the chip equipment maker said on Tuesday it expects its 2003/04 group net profit to be 78 percent higher than previously anticipated due to strong sales of machinery used to process silicon wafers into microchips. Telecom shares also bore the brunt of profit-taking after a disappointing earnings forecast from cellphone giant Nokia Corp . Among such stocks, NTT DoCoMo Inc <9437.T> lost 2.07 percent to 237,000 yen.///