Japanese stocks were sharply higher by mid-afternoon on Wednesday as renewed optimism about the country's economic recovery fueled buying of shares that took a beating in the market's recent sell-off. Banks, insurers and retailers rallied after gross domestic product (GDP) figures released on Tuesday showed that Japan's economy grew much faster in the January-March period than economists had expected. Active buying by individual investors also boosted Softbank Corp <9984.T> and Hikari Tsushin Inc <9435.T>, analysts said. The Nikkei average <.N225> gained 2.45 percent to 10,973.64 by 0444 GMT, building on Tuesday's 1.96 percent rally.
On Monday, the Nikkei tumbled 3.18 percent to close at a level unseen since mid-February. The broader TOPIX index <.TOPX> was up 2.56 percent at 1,103.73 in afternoon trade. "Many knew that stocks were oversold in recent sessions, so the GDP news provided a good reason to buy," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities. "Individual investors are playing an active part in today's rises... it seems as if they are returning to the market with buying on their minds after clearing positions in the sell-off." Sato said, however, that the Nikkei was likely to struggle to top the psychological barrier of 11,000 if investors failed to find other reasons to buy. UFJ Holdings Inc <8307.T> rallied 6.9 percent to 558,000 yen, extending gains into a second straight day, despite a newspaper report that the bank was set to revise its net forecast for the last business year to a consolidated loss of between 300 and 400 billion yen ($2.6-$3.5 billion) due to increased bad-loan costs. Analysts said the revision would suggest steady progress in the lender's bad-loan disposal efforts and be positive for UFJ, the smallest of Japan's top four banks. Bigger rival Mizuho Financial Group <8411.T> climbed 4.33 percent to 458,000 yen, building on the previous day's 7.9 percent surge. Retailing giant Ito-Yokado Co <8264.T> was up 4.47 percent at 4,210 yen. Its shares jumped 3.1 percent on Tuesday after the GDP figures showed that private consumption, the largest part of the economy, grew by a surprisingly healthy 1.0 percent. Internet firm Softbank rallied 5.26 percent to 4,000 yen and Internet investor Hikari Tsushin leaped 10.58 percent to 4,390 yen. Other notable movers include Sega Corp <7964.T>, which surged 14.0 percent to 1,140 yen after its top shareholder, Sammy Corp <6426.T>, said the previous day that it would buy out the videogame developer in a stock deal worth $1.4 billion. The two companies are to swap their shares for shares in a new holding company. Each share in Sammy will be swapped for one share in the new firm, to be called Sega Sammy Holdings, while each share in Sega will be swapped for 0.28 share. Sammy's shares dropped 1.62 percent to 4,260 yen. ($1=114.03 yen)///