Tokyo stocks sharply higher in early trade

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TOKYO: Tokyo share prices rose sharply in early trade on Wednesday after US and European markets closed higher following sharp swings.

The benchmark Nikkei-225 index of the Tokyo Stock Exchange was up 154.18 points or 1.72 percent at 9,098.66 after the first 20 minutes of trading. It rose 2.2 percent briefly on the first day of gains in four trading days.

US and European stocks rebounded on Tuesday from Monday's huge losses in the wake of the US credit downgrade.

Wall Street bulls drove the Dow Jones Industrial Average up 3.98 percent, battling back from a bout of weakness after the Federal Reserve offered a downbeat outlook on the US economy.

Buying emerged after the US central bank's policy-setting Federal Open Market Committee said that it expected to maintain interest rates near zero for "at least" the next two years due to economic weakness.

In Tokyo, Toshiyuki Kanayama, market analyst at Monex, said the sectors most heavily sold over the past three days, including financials, technology and auto stocks, were likely to lead gainers.

Many blue chips have hit 2011 or multi-year lows during the selloff.

"Market sentiment hasn't stabilised yet, so while we'll likely see a relief rally today, it'll be a rocky path to recovery," Kanayama added, noting economic concerns in the United States and Europe have not changed fundamentally.

The dollar firmed against other major currencies.

The dollar changed hands at 77.07 yen in early Asian trade, up from 76.94 yen in New York late Tuesday, while the euro edged down to $1.4362 from $1.4374.