Tokyo's Nikkei average rose 0.35 percent on Thursday, snapping a nine-day slide on a technical bounce in major exporters, but it ended the April-September fiscal first half down 7.61 percent. The Nikkei <.N225> finished the day up 37.47 points at 10,823.57, bolstered by gains in Toyota Motor Corp. <7203.T> and other blue-chip exporters. The Nikkei had hit a six-week closing low on Wednesday and fell for a ninth straight session, marking its longest losing streak in two years as high oil prices further clouded the Japanese economic outlook following recent signs of a slowdown. The negative half-year performance compares with a 14.6 percent jump in the Nikkei in the six months to March 31.
The Nikkei rallied 28.18 percent to 10,219.05 in April-September last year as moves towards resolving banks' bad-loan problems prompted investors, particularly foreigners, to rush into the Tokyo market for bargains. Analysts said the day's gains were curbed as investors remained unconvinced about the outlook for U.S. stocks given that crude oil was staying near $50 a barrel and due to caution ahead of the Bank of Japan's "tankan" corporate survey, which will be released just before the market opens on Friday. "This is quite a minor bounce (after the nine-day losing streak)," said Tetsuya Ishijima, a senior investment strategist at Okasan Securities. The broader TOPIX index <.TOPX> ended Thursday up 1.20 percent at 1,102.11 but also posted a negative return for the April-September period, falling 6.54 percent. A poll of 27 economists on the quarterly tankan produced a median forecast of plus 23 for the headline figure, the diffusion index (DI) for large manufacturers. That would come as a slight improvement from plus 22 in the June survey and be the strongest reading since August 1991. But the poll suggested that economists saw confidence peaking as the median December forecast for the DI, which indicates expected conditions three months ahead, was plus 22. "The market is looking only for the December figure, which is widely expected to come in lower than the September figure," Ishijima said. As for the six months ahead, many analysts expect a recovery in Japanese shares, based on optimism about Japan Inc.'s solid earnings growth after years of restructuring. Responses to a poll in mid-September suggested expectations for a fourth straight year of earnings expansion in the 12 months to March 2006, marking the longest winning streak in the country's postwar period. "Once there is confidence that there will be sustainable growth in the U.S. and Japan through next year, which I think is quite likely, the Nikkei will easily pass through 12,000," said Tsuyoshi Nomaguchi, strategist at Daiwa Securities.
"The key time is the Christmas shopping season starting in late November ... Of course, oil is the biggest risk. This scenario would be nonsense if oil stayed glued at or above $50." On Thursday, Toyota, the world's second-biggest auto maker, rose 3.69 percent to 4,220 yen and rival Honda Motor Co. <7267.T> added 1.52 percent to reach 5,340 yen. Technology firms also bounced back, with Hitachi Ltd. <6501.T> rising 3.74 percent to 666 yen. Bargain-hunting lifted shipping firms and steel makers as investors considered losses in recent sessions overdone given companies' profit prospects, analysts said. Daido Steel Co. <5471.T>, a manufacturer of speciality steel, advanced 2.51 percent to 286 yen after it doubled its profit forecast for April-September. Investors shrugged off Japanese production data released before the opening as it came almost in line with expectations. Industrial output rose 0.3 percent in August from July, slightly under the market's consensus forecast of a 0.5 percent gain.///