Japan's Nikkei stock average closed higher for the third session on Friday, bolstered by a rise on Wall Street and a batch of data showing a continuing recovery in the Japanese economy plus higher consumer spending. The Nikkei <.N225> ended up 1.29 percent at 11,309.57 after gaining 1.85 percent in the previous two days. The broader TOPIX index <.TOPX> put on 1.40 percent to 1,142.38. Banks, communications firms and other companies that rely heavily on Japan's domestic economy rose after data showing a jump in household spending and industrial output in April.
A number of exporters drew buyers after the U.S. Dow Jones index <.DJI> bounced back to a level last seen three weeks ago. But buying was not particularly aggressive because of caution over high oil prices and the prospect of a rise in interest rates in the United States, Japan's biggest trading partner. "Today's rally was unexpected since I had thought that most investors would hit the sidelines ahead of a three-day weekend in the U.S. and the key jobs data there next week," said Koichiro Suzuki, an investment manager at Sompo Japan Asset Management. "The strong economic data this morning seems to have lured them in." Japan's second-biggest retailer, Ito-Yokado Co <8264.T>, rose 4.37 percent to 4,540 yen after official data showing that average spending by Japanese wage earner households rose a real 7.2 percent in April from the same month last year.
TECHS, SOFTBANK FIRM
Technology stocks such as Toshiba Corp <6502.T> attracted buyers after a record 8.5 percent year-on-year rise in industrial output in April, which highlighted the strength of exports and demand for digital electronic appliances that have underpinned recent economic growth. Chips-to-computers conglomerate Toshiba gained 3.49 percent to 475 yen and industrial electronics giant Hitachi Ltd <6501.T> rose 2.99 percent to 760. Softbank Corp <9984.T> was up 1.68 percent at 4,230 yen, 3.17 percent above its level before news that the Internet service provider was considering buying Japan Telecom. However, the eventual announcement late on Thursday of the deal to buy Japan's third-biggest fixed-line operator for 340 billion yen ($3.1 billion) got a mixed reception from rating agencies, indicating the synergy effects are far from certain. Moody's Investors Service placed Softbank's ratings under review for a possible upgrade, while Standard & Poor's said it may downgrade its ratings on the company.
The Tokyo market is likely to be caught in a narrow range next week, analysts said. "As long as energy stays this low in the market, it will be trapped around the current level, which is a half-way recovery (from its recent 1,600-point fall from a 33-month closing high in late April)" said Yusuke Sakai, manager of equities at Mizuho Securities, noting that volume had been light this week. U.S. and European financial markets are closed on Monday for holidays. Investors are waiting for a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) on June 3 and U.S. jobs data the following day.
PRE-MSCI BUYING
Analysts said last-minute buying by passive fund managers aiming to bring their portfolios into line with changes in Morgan Stanley Capital International's (MSCI) Japan index, effective after Friday's close, helped lift turnover a little. Trade volume thus edged up, with 1.388 billion shares changing hands, the highest total since Thursday last week. Gainers outnumbered decliners 1,206 to 256. MSCI's regular review of its global equity indices, announced on May 12, resulted in 31 additions to its Japan index and no deletions, so Japan's weighting in a standard portfolio for global funds tracking MSCI indices is set to go up. Recently floated Shinsei Bank <8303.T>, Internet portal Yahoo Japan Corp <4689.T> and car parts marker NOK Corp <7240.T> are among the 31 stocks to be added to the index. Shinsei, the first Japanese bank to be turned around and floated successfully by a foreign fund, jumped 7.03 percent to 746 yen by the close. The stock moved little immediately after its annual earnings report, in which Shinsei forecast a slight decline in profit this year, as expected, but last-minute buying pushed the stock up.///