A rise in retailers and insurers helped to lift Japanese stocks by mid-afternoon on Tuesday, but gains were capped as investors, awaiting fresh direction from Wall Street, shied away from chasing share prices higher. While caution about higher oil prices also made investors wary ahead of an OPEC meeting later this week, the spotlight was on struggling textile maker Kanebo Ltd <3102.T> after it unveiled a 149.5 billion yen ($1.36 billion) financial aid package from Japan's state-backed rescue body and its creditor banks. Kanebo's shares surged 15.15 percent to 114 yen. The Nikkei average <.N225> rose 0.65 percent to 11,309.38 by 0444 GMT. It lost 0.65 percent on Monday when a weekend attack by suspected al Qaeda militants in Saudi Arabia, the world's top oil exporter, stoked concerns about oil supplies. The broader TOPIX index <.TOPX> was up 0.31 percent at 1,143.44. Analysts said investors were mostly holding back before trade resumed on Wall Street after the Memorial Day holiday to see how U.S. investors would react to the attack and higher oil prices. World oil prices jumped about 1.5 percent on Tuesday after the attack, which killed 22 people but did not interrupt oil flows from Saudi Arabia.
Equities and oil markets in London and New York were shut on Monday for public holidays. "Investors are very cautious about oil prices and some have also started saying that even if OPEC agrees to raise output, that won't be enough to meet growing demand," said Yoshihiko Kosuga, a general manager at Mizuho Investors Securities. Friday's release of U.S. jobs data is also eagerly awaited as the outcome is expected to give a clue about when and by how much the Federal Reserve may raise its interest rates from a four-decade low of one percent. "Until we see the outcome of this data and the (OPEC) meeting, players will likely remain cautious and chase only those stocks with definite reasons for buying," said Kosuga. Retailers drew buying with clothing store chain Shimamura Co <8227.T> rising 2.57 percent to 9,190 yen after UBS on Monday raised its target price to 10,500 yen from 9,200 yen. Seiko Epson Corp <6724.T> gained 2.37 percent to 3,880 yen a day after the company said it would begin selling microdisplay rear-projection televisions in Japan, marking its entry into the highly competitive domestic market for large, flat-screen TVs. Hino Motors Ltd <7205.T> climbed 3.92 percent to 690 yen, after the truck unit of Toyota Motor Corp <7203.T> said on Monday that it aimed to achieve an operating profit margin of five percent in the business year ending in March 2007, up from 4.2 percent in the year ended this March.
But UFJ Holdings Inc <8307.T> fell 0.74 percent to 539,000 yen after a newspaper report on Tuesday that Japan's financial regulator was looking into the possibility of a criminal case against the megabank. The Sankei Shimbun, without quoting sources, said government inspections last October found that the company may have been keeping two sets of books. UFJ Bank, a core unit of the holding firm, said in a statement on its Web site that it did not believe it had committed a crime. ($1=109.58 yen)///