Markets

Japanese shares gain on rallies in US, Europe

TOKYO : Japanese shares rose in morning trade Thursday, driven by bargain hunting as well as rallies in Europe and on Wa

Published May 26, 2011 Updated May 26, 2011 07:04am

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By Syed Murtaza Gheblehzadeh

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The headline Nikkei was also given a lift by a share buy-back plan from Canon and news of a massive corporate restructuring plan by office equipment maker Ricoh.

The index added 1.29 percent or 121.80 points to 9,544.68 by noon while the Topix index of all first section shares rose 1.06 percent or 8.67 points to 826.41.

Traders were given a strong lead from Wall Street, where the Dow Jones Industrial Average rose 0.31 percent, snapping a three-day losing streak, while in London the FTSE 100 index closed up 0.20 percent. In Frankfurt, the DAX added 0.28 percent and Paris' CAC 40 rose 0.31 percent.

Tokyo welcomed Canon's decision to buy back up to 1.2 percent of its own shares for as much as 50 billion yen ($610 million).

The announcement, which came after the market closed Wednesday, lifted Canon shares 5.49 percent to 3,840 by the break.

And on Thursday Ricoh said it planned to cut 10,000 jobs worldwide over three years to turn around sagging business operations. The news pulled the firm's shares up 7.18 percent to 911 in the morning session.

Tatsunori Kawai, chief strategist at kabu.com Securities, said the 10-percent job cut "is huge for Ricoh and very bold".

But the general outlook for Japanese shares remained uncertain, dealers said, with the government yet to set a clear vision for rebuilding the northeast coastline, which was destroyed by the March 11 earthquake and tsunami.

"Unless the Japanese government lays out concrete measures for quake reconstruction, the market cannot shift into a clear buying direction," said Masayoshi Yano, a senior market analyst at Meiwa Securities.

"It seems like shares have reached a bottom for now, but the rebound will not be a powerful one" amid continuing uncertainty about Japanese corporate earnings, said Yutaka Yoshii, general manager at Mito Securities.

Among other major shares, Toyota Motor rose 1.21 percent and chipmaker Elpida Memory soared 3.24 percent.

But Sony fell 0.54 percent as it prepared to issue its annual earnings after the market close.

The electronics and entertainment giant is expecting a $3.2 billion loss due to damages from the disaster as well as huge hacking attacks that have resulted in leaks of customer information.

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