Nikkei, Topix both climb 2.4 percent

Japan's Nikkei average hit its highest closing level on Tuesday since a massive earthquake and tsunami triggered a radiation crisis a year ago, buoyed by indications the US Federal Reserve may keep its supportive monetary policy. The benchmark Nikkei rose 2.4 percent, or 236.91 points, to 10,255.15, while the broader Topix also climbed 2.4 percent to 872.42.
"The market was very healthy indeed in the run-up to the earthquake last year. Japan is the premier play on global growth. The world was growing and Japan should have been the biggest beneficiary and it got hit by the earthquake," said Nicholas Smith, Japan strategist at CLSA.
The earthquake and tsunami hit Japan on March 11 last year. The Nikkei has surged 21.3 percent so far this year on a run of robust US economic data and easing programmes by global central banks, taking its 14-day relative strength index to "overbought" territory at 73.7. The index is on track for its best quarterly performance since the second quarter of 2009, when the index surged 22.8 percent.
But Japanese equities were still considered undervalued compared with their global peers. The Topix carries a 12-month forward price-to-book ratio of 0.98 compared with the S&P 500's 2.0 and STOXX Europe 600's 1.4, Thomson Reuters Datastream data showed. Blue chips bounced back on Tuesday from a recent pullback in Tokyo markets, with Honda Motor Co up 3.5 percent, Toyota Motor Corp adding 3.6 percent, Canon Inc gaining 3.5 percent and investment bank Nomura Holdings climbing 4.1 percent.
Sumitomo Metal Mining Co jumped 5.9 percent after it said it had confirmed a new gold deposit containing 40 tonnes at its mine in Alaska. "Certainly the market has been caught a little bit short," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. The Nikkei lost 1.2 percent last week and eked out modest gains on Monday.
Just as the global rally looked to have run out of steam, comments from Fed Chairman Ben Bernanke on Monday reinforced the view that further easing from the central bank may be possible. Nearly 2.27 billion shares changed hands on the main board, up from 1.13 billion shares on Monday. Japan's megabanks were also in demand on Tuesday, with Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group up between 2.5 and 4.3 percent. Bucking the overall market trend on Tuesday was mobile gaming operator Gree Inc, which shed 1.9 percent.