Markets

Tokyo stocks up 1.44pc by noon

TOKYO : Tokyo stocks rose sharply Wednesday morning on bargain buying of exporters after the yen weakened in the wake of

Published September 7, 2011 Updated September 7, 2011 04:18am

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By Shoaib Ur Rehman

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Speculation that Japanese authorities may follow the Swiss National Bank with their own moves to combat the strength of the yen suppressed the unit on Wednesday, said dealers.

By the break, the benchmark Nikkei 225 index at the Tokyo Stock Exchange had gained 1.44 percent or 124.02 points to 8,714.59, after closing Tuesday at its lowest level since April 2009.

The broader Topix index of all first-section issues was up 1.26 percent or 9.34 points at 750.54.

"There's buying back on relief over the yen's fall and a smaller-than-expected fall in US stocks," Toshikazu Horiuchi, an equity strategist at Cosmo Securities, told Dow Jones Newswires.

He added that investors were awaiting key comments from US President Barack Obama, Federal Reserve chairman Ben Bernanke and European Central Bank President Jean-Claude Trichet on Thursday for signs of more boosting measures.

Takuya Yamada, senior portfolio manager at ITC Investment Partners, warned: "This yen-induced buy-back won't last, as the bigger issue surrounding the European debt crisis looms in the background."

Switzerland's central bank said after the Tokyo market closed Tuesday that it would fight to keep the Swiss franc from rising past 1.20 francs against the euro, sending safe-haven flows surging to the dollar.

Speculation that Japanese authorities may follow the Swiss central bank with aggressive moves dented the yen Tuesday.

The SNB's action "increases pressure on the (Bank of Japan) to act unilaterally," Brown Brothers Harriman said in a note. The BOJ is due to announce its policy decision later Wednesday.

Traders are watching to see what the central bank will do amid speculation it could introduce additional steps to mitigate the negative impact of the strong yen, which hit a postwar high versus the dollar in August.

The greenback fetched 77.43 yen in Asian trade, lower than 77.68 in New York late Tuesday but sharply up from 76.80 yen Tuesday afternoon in Tokyo. The euro rose to 108.68 yen from 107.96 yen in Tokyo on Tuesday.

On Wall Street, the Dow Jones Industrial Average closed down 0.90 percent at 11,139.30, its third straight trading day with triple-digit losses amid the 17-nation eurozone's debt woes and a possible US slowdown.

Investors were unsettled by anti-austerity protests in Italy and Spain and concerned by signs that Greece might fail to meet debt-cutting goals and that Germany may drop support for the latest Greece bailout plan.

Among leading exporters, Sony climbed 2.82 percent to 1,565 yen and Toyota rose 2.34 percent at 2,666 yen after hitting 2011 lows Tuesday.

Toshiba was up 0.33 percent at 298 yen. On Tuesday it agreed to take a 20 percent stake in US nuclear equipment maker Westinghouse from Shaw Group, raising the Japanese firm's share to 87 percent.

The move was seen as broadly negative for Toshiba, which tumbled to a 2011 low on Tuesday ahead of the announcement, amid weaker growth prospects for nuclear power since the March Fukushima disaster.

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