Nikkei rises three percent

The Nikkei stock average rose 3 percent on Thursday, posting its biggest daily gain in eight weeks, led by exporters such as Canon Inc on a softer yen and surprisingly strong US durable goods orders. In a broad rally, Aderans Holdings Co Ltd soared after the wig maker's president and most members of its board failed to win re-election at its annual shareholders meeting, the first time a Japanese firm's management has been pushed out led by an activist fund.
The market was also boosted partly in the morning by an unsubstantiated report that North Korean leader Kim Jong-il may be dead, said a trader and a fund manager. The Tokyo market has been on a rollercoaster ride this week, with sharp rises and falls by turn every day as investors switch bets between bond and stock futures.
"US durable goods were good, and yesterday's fall made the gain sharper," said Masashi Wakabayashi, general manager of the trading deparment at Meiji Dresdner Asset Management.
US stocks rose on Wednesday after a government report on orders for durable goods showed a surprising jump in business investment last month. The Nikkei ended up 415.03 points at 14,124.47 after falling 1.3 percent the previous day. The broader Topix index advanced 2.4 percent to 1,380.63.
Some said the prospect of inflation has increased the relative appeal of stocks in comparison with bonds. "Investors are gradually starting to move on the possibility of the stock market under inflation, or rather potential interest rate increases," said Masayoshi Yano, senior market analyst at Meiwa Securities.
"In Japan, investors have felt safe with bonds in a prolonged period of deflation and cast a cool eye on equities. But now, the money has started flowing to stocks from bonds," he said.
Japan's consumer price index in April is due out on Friday, with economists expecting the pace of the annual rise in Japan's core consumer price index to have slowed to 1.0 percent last month from 1.2 percent a month earlier due largely to a temporary fall in the gasoline tax.
But hikes in utility charges and food prices amid booming international commodity markets likely kept annual inflation near a decade-high, economists said. A little-known South Korean online news site reported Kim Jong-il had been assassinated, quoting a highly placed Chinese security official.
"The rumour prompted short-covering in the market on receding worries about geopolitical risks," a trader said. South Korea's National Intelligence Service said it had no information to substantiate the report and was making further checks. Digital camera maker Canon rose 3.9 percent to 5,540 yen and industrial robot maker Fanuc Ltd jumped 5.1 percent to 11,080 yen, the biggest boost to the Nikkei.
Aderans jumped 8.7 percent to 2,020 yen. Oki Electric Industry Co plunged 10.1 percent to 196 yen after Goldman Sachs cut its rating to "sell" from "neutral," saying the sale of its chip business was not likely to improve the firm's earnings and financial condition.
Oki said on Wednesday it would sell its microchip operation to Rohm Co for about 95 billion yen ($908 million). Trade was thin on the Tokyo exchange's first section, with 1.9 billion shares changing hands, compared with last week's daily average of 2.3 billion.Advancing stocks beat declining ones by nearly 9 to 1.