Nikkei jumps 2.4pc on weak yen; financials, exporters lead

TOKYO: Japan's Nikkei share average climbed 2.4 percent on Tuesday, boosted by financials and exporters as the yen weakened after a US Treasury official voiced support for Japan's aggressive policies to combat deflation and bolster growth.

The index rose to 11,422.77, within reach of a 33-month high of 11,498.42 struck last Wednesday. The benchmark has risen nearly one-third since mid-November.

"The upward trend in Japanese stocks provided a tailwind to the securities sector on hopes that the rallies would bolster their commission income," said Yuya Tsuchida, a strategist at Toyo Securities.

"The Nikkei is expected to stay strong this week and may reach 11,500 if the yen stays around current levels of around 94 yen to the dollar," Tsuchida said.

The securities sector, which jumped 5.3 percent, was the best sectoral gainer on the main board, with Nomura Holdings soaring 5.9 percent and Daiwa Securities Group jumping 4.8 percent.

The banking sector was the third-best sectoral performer, adding 3.2 percent, with Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc rising 4.4 percent and 3.6 percent, respectively.

Japan's aggressive expansionary monetary policies have sharply weakened the yen in recent months, prompting concerns in Europe and the United States.

With finance ministers from the Group of 20 nations scheduled to meet this week, investors betting on a weaker yen were relieved after US Treasury Undersecretary Lael Brainard said Washington supports Japanese efforts to end deflation and reinvigorate growth.

 "Her comments gave confidence to the market. It was surprising, and was taken as the Obama administration giving a green light to 'Abenomics'," said Takuya Takahashi, a market analyst at Daiwa Securities, adding that he expects the Nikkei to remain strong this week.

The dollar touched a high of 94.42 yen on Monday, its highest level since May 2010.

ISUZU, NISSAN UNDERPERFORM

Exporters gained ground, with Toyota Motor Corp rising 2.8 percent, Sony Corp advancing 3.2 percent and Canon Inc adding 2.8 percent.

However, Isuzu Motors Co Ltd shed 5.2 percent after the automaker retained its operating profit and sales forecast for the year ending March 31, disappointing investors who had hoped that a weaker yen would boost overseas revenue, and thereby profits, in the final quarter.

 Nissan Motor Co also lost ground, falling 3.8 percent after it bucked the optimistic trend among other Japanese carmakers reporting quarterly earnings, leaving its annual profit forecast unchanged as sluggish sales weighed on its bottom line.

 The broader Topix gained 1.9 percent to 975.47 in relatively active trade, with volume at 84 percent of its full daily average for the past 90 trading days.

"Investors were worried that finance ministers would criticise the recent weakness in the yen. While the currency moves have been sensitive to officials' comments in general, people thought any comment from G20 would trigger yen buying," said Hiroichi Nishi, an assistant general manager at SMBC Nikko Securities.

"But such worries are receding as she (Brainard) said she supports Japan's efforts to end deflation."

European Central Bank council member Jens Weidmann also said the euro was not overvalued at current levels.

Analysts said that concerns over the euro-zone economy, which dented the market sharply on Friday, are receding for the time being.

They added that the yen looks set to stay under pressure on expectations that Abe will endorse a far more dovish Bank of Japan regime when the current leadership's term ends next month.

The BOJ, which last month adopted a 2 percent inflation target as a sign of its commitment to fight deflation and announced a shift to "open-ended" asset buying, is expected to refrain from taking fresh easing steps when it meets this week.