Nikkei posts biggest daily gain

Tokyo stocks rose 1 percent for their biggest daily gain in three weeks on Tuesday, led by auto stocks climbing on bullish comments from a brokerage but volume was thin and most players were on the sidelines ahead of a Federal Reserve policy meeting.
Autos pushed the Nikkei stock average above the closely watched 9,400 line, after Daiwa Securities reiterated its "positive" stance on the sector citing solid demand, an earnings lift as supply chains normalise after the March 11 disaster and attractive valuations.
But with the Federal Reserve's $600 billion bond buying programme ending this month, investors are cautious ahead of its two-day meeting due to end on Wednesday, the first since US economic data started to take on a decisively weaker tone around a month ago.
"Autos are taking the lead, building on a recent upward trend because investors have become increasingly convinced their profits will recover relatively quickly compared to other sectors," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.
In the past month, the auto industry has seen the biggest upward revision in analysts' 12 month earnings predictions according to Thomson Reuters StarMine. Those predictions call for 24 percent profit growth for domestic autos and auto part companies in the current financial year compared with 2 percent for all Japan corporates tracked by StarMine.
The benchmark Nikkei average closed up 1.1 percent at 9,459.66 on Tuesday, while the broader Topix gained 1.1 percent to 815.73.
"Today's rise looks pretty solid, but it's on relatively thin volume and short-term buying by hedge funds in Nikkei futures is certainly one of the factors pushing the market higher," said Takashi Ohba, a senior strategist at Okasan Securities. Market players said there were basket buy orders for small and mid-caps from European players worth 13 billion yen on Tuesday, while Asian investors also placed orders for 13 billion yen.
Resistance for the Nikkei looms around 9,500, near the base of the Ichimoku cloud on its daily chart and at its 25-day moving average, which is now 9,508.06. The Nikkei has lost 10 percent since March 10, the day before a massive earthquake and tsunami ravaged Japan's northeast coast while Asian stocks outside Japan have eked out a 0.8 percent gain over the same period.
Among auto stocks, Nissan Motor hit a five-week high, jumping 3.1 percent to 820 yen, while the world's largest automaker Toyota Motor rose 0.9 percent to 3,205 yen. The two auto stocks were among the most actively traded by turnover on the main board. Shares in Japanese money manager Sparx Group jumped the most in nearly two months, adding 4.2 percent to 7,400 yen.
The firm's founder told a Reuters summit it would raise up to $100 million over the next year in a new real estate fund to invest in companies building temporary hotels in areas damaged by the earthquake and tsunami. But Panasonic shed 0.7 percent to 923 yen, after it forecast its full-year operating profit would decline 11 percent to 270 billion yen ($3.4 billion), in line with expectations, after the quake hit production and sales. Only 1.6 billion shares changed hands on the Tokyo stock exchange's main board, below last week's daily average of 1.82 billion shares. Advancing shares outnumbered declining ones by 1,308 to 241.