Japanese stocks were higher by late afternoon on Wednesday but off earlier highs as banks slipped into negative territory and several exporters erased some of their gains. Technology stocks including Fujitsu Ltd <6702.T> were higher because investors saw them as undervalued given bright earnings prospects. Retailers and steel makers also rose. But analysts said the gains were mainly a knee-jerk reaction to a rise on Wall Street, and market sentiment remained fragile amid a lack of players, who are holding back amid uncertainty over Wall Street's short-term outlook. Investors are also cautious about trading as speculation mounts over whether the Organisation of Petroleum Exporting Countries (OPEC) will agree to increase oil output at a June 3 meeting in Beirut. The Nikkei average <.N225> was up 1.66 percent at 11,144.64 by 0443 GMT, after having risen as high as to 11,213.79 earlier in the day.
On Tuesday, the Nikkei fell 1.25 percent, snapping a two-day rally, as investors worried that high oil prices could hurt corporate earnings and consumer spending, a main engine of economic growth. The broader TOPIX index <.TOPX> put on 1.05 percent to 1,127.39. "The market doesn't have either aggressive buyers or aggressive sellers," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
"The market lacks direction, but the mood seems to be slightly negative, which is reflected in the weakness in the banking sector." UFJ Holdings Inc <8307.T> lost 2.72 percent to 573,000 yen, adding to Tuesday's 3.76 percent drop. Japan's fourth-largest banking group posted a third straight year of losses on Monday but said it would be in the black in the current business year to next March. Bigger rival Mizuho Financial Group <8411.T> fell 1.07 percent to 461,000 yen, dragging down the banking sector's sub-index <.IBNKS.T> by 0.49 percent and making it the worst-performing sector. But chips-to-computers conglomerate Fujitsu gained 1.11 percent to 728 yen, although it was off an earlier high of 745 yen. It said in late April it returned to the black in the year ended March 31, and its profit outlook for the current year exceeded analysts' estimates. Office equipment maker Canon Inc <7751.T> rose 2.03 percent to 5,520 yen, after having risen as high as 5,540 yen. Vodafone Holdings KK <9434.T> was also in the spotlight. Its shares were untraded with a glut of buy orders at 284,000 yen, up 16.4 percent, after the company said on Tuesday that its British parent, Vodafone Group Plc , would buy Vodafone Holdings shares at 300,000 yen each in the market.///