TOKYO: Japan's Nikkei share average rose on Wednesday, hitting a 7-1/2 month high led by gains in tech shares which lifted Wall Street, but gains may be trimmed in late trade as investors are likely to lock in profits before Sunday's election.
By the midday break, the Nikkei rose 0.5 percent at 9,570.08 after opening at 9,606.25, the highest level since April 27.
The index was unmoved by news North Korea had launched a long-range rocket in defiance of international sanctions.
"Since there have been reports on North Korea's rocket launch plan lately and there seems to be no damage seen, the market seems to have dismissed the news," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Chip-related shares outperformed the market after the Philadelphia Semiconductor Index, or Soxx, rose 1.9 percent overnight, lifting confidence in the sector. Advantest Corp gained 2.8 percent, Nikon Corp jumped 3.5 percent and Canon Inc added 2.3 percent.
But traders said that the rises may be short-term as the current market level is back to 'overbought' territory, noting that investors may not take large positions before a lower house election on Sunday.
"Investors are buying as sentiment is positive after Wall Street rose on tech shares, but today's buying is not a serious bet," said Mitsushige Akino, a fund manager at Ichiyoshi Asset Management. "They may lock in short-term profits, and the Nikkei may be level with yesterday's close at the end of the day."
The index's 14-day relative strength index stood at 70.43. A level of 70 indicates that the market is overbought and it often signals a possible near-term pullback.
The benchmark has risen 10.5 percent over the past month while the yen has softened after Shinzo Abe, the leader of the main opposition party which is expected to win the election, called for aggressive policy action from the Bank of Japan, including embarking on "unlimited easing".
Center>Copyright Reuters, 2012
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