Tokyo stocks likely to stay firm after eurozone deal

Tokyo stocks will likely stay firm in the coming week with investor sentiment boosted after eurozone leaders struck a deal towards resolving the bloc's debt crisis that threatens the global economy. The Nikkei average closed the Friday session above 9,000 for the first time since September 1 in line with upbeat global stock markets, while US economic growth data has eased worries of a new recession.
"The Nikkei is expected to consolidate levels above 9,000 and may test its topside if global investors return to risk assets," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.
"Investors are gradually regaining their risk appetite as excessive fears recede along with uncertainty over the global economy," Nishi said.
In the week to October 28, the benchmark Nikkei 225 index at the Tokyo Stock Exchange gained 371.58 points or 4.28 percent to 9,050.47. The Topix index of all first-section issues was up 27.22 points or 3.66 percent to 771.43. The deal brokered Thursday will cut 100 billion euros off Greece's debt mountain thanks to an agreement between the eurozone and private sector creditor banks to take a 50-percent loss on their Greek debt holdings.
The eurozone leaders have also agreed to leverage the firepower of their bailout fund to one trillion euros.
The market is closely watching the Group of 20 summit scheduled to take place in Cannes for two days from Thursday where eurozone debt problems will be high on the agenda. "The eurozone reached the deal, but problems they may face in implementing the plan could pose a downside risk to stocks," said Kenichi Hirano, operating officer at Tachibana Securities.
Also in focus will be key US economic Indicators, notably a jobs report due out on Friday, for clues to the health of the world's largest economy.
The Federal Reserve will announce on Wednesday the decision of its two-day policy meeting, after speculation about possible credit easing weighed on the dollar. The yen continued to hit fresh post-World War II highs against the dollar, raising concerns over its adverse effects on Japanese exporters. On the domestic front, the earnings reporting season for major Japanese firms will get into full swing, with Sony, Honda and Panasonic due to announce their July-September results.
"Corporate earnings released so far have shown mixed results, but the market has proved resilient even to downward revisions of their outlook," Hirano said.