Tokyo shares hit 3-1/2-month high on recovery hopes

SYDNEY: Japanese stocks advanced to a 3-1/2-month high on Friday, tracking stronger US futures, as sustained optimism about an economic rebound from a coronavirus-driven slump helped offset early profit-taking.

The benchmark Nikkei average reversed early losses to end 0.7pc higher at 22,863.73, its highest closing level since Feb. 21.

E-Mini futures for the S&P 500 climbed 0.8pc by late Asian trade, providing a boost to Japanese stocks, which had seen some profit-taking in the morning session.

For the week, the Nikkei gained 4.5pc - its third straight weekly gain.

The broader Topix rose 0.5pc on Friday to 1,612.48, its highest closing since Feb.21.

The index also marked its third straight weekly gain, rising 3.1pc.

All but eight of the 33 sector sub-indexes on the Tokyo exchange finished higher, with air transport being the top-performing sector, up 8.2pc, after US-listed airline stocks jumped overnight.

Japan Airlines soared 9.7pc and ANA Holdings surged 7.1pc.

Reflecting continued confidence in the revival of the global economy, the safe-haven yen weakened further, with the dollar/yen hitting a fresh two-month high of 109.38 yen and the euro/yen touching a 13-month high of 124.43 yen in Asian trade.

As a weak yen boosts Japanese manufacturers' profits made abroad when repatriated, shares of export-oriented automakers were in demand.

Mazda Motor leaped 5.9pc, while Nissan Motor and Honda Motor gained 4.8pc and 3.8pc, respectively.

Longer-term US Treasury yields jumped overnight, providing a tailwind for Tokyo-listed financial stocks.

Dai-ichi Life Holdings advanced 6.8pc and Mitsubishi UFJ Financial Group (MUFG) climbed 2.6pc.

Toshiba Corp rose 3.4pc after the company's earnings.

The firm said strong orders for infrastructure projects and cost cuts will help partly offset an impact from the COVID-19 outbreak.