Japan's Nikkei average snapped a three-day losing streak on Monday after stronger-than-expected data from China eased worries of an abrupt economic slowdown, while buying by domestic investors provided support. Blue-chip shares were in demand, after a pullback last week, with Japan's No 1 investment bank Nomura Holdings up 2.5 percent and China-reliant industrial robot maker Fanuc Corp gaining 2 percent.
The Nikkei closed 0.3 percent higher at 10,109.87 after losing 1.7 percent in the previous three sessions. Fujio Ando, senior managing director at Chibagin Asset Management, said domestic investors were stepping in to buy equities as Monday marked the first trading day of the new financial year.
"Investors are buying off the bat ... I think they're shrugging off economic concerns over Europe and China and concentrating on companies that are expected to benefit from Japan's reconstruction, while production by exporters is also recovering from last year's disasters," Ando said.
"The only factor that is affecting market strength today is this Chinese PMI data and domestic institutional start-of-the-year buying, that's it," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. Foreign buying "activity is picking up slightly but still not much from long-only investors." Deutsche Bank said in a note that it estimated foreign investors' remaining buying capacity was 1.2 trillion yen ($14.58 billion), assuming they would buy back net sales made since last July, although the Nikkei's momentum slowed after breaking the 10,000-mark on March 14.
Credit Suisse strategists were upbeat, upgrading Japan to "tactically overweight" for the next few months and suggesting Japan should outperform by another 12 percent. The broader Topix index added 0.2 percent to 856.05 on Monday. About 2.16 billion shares changed hands, up from 1.89 billion on Friday and an average of 1.98 billion last week.
Automakers received a boost from the BoJ survey, however, which showed the sentiment index for big car makers at plus 28, improving for a third straight quarter, lifted by the waning impact of last year's floods in Thailand and the government's subsidies for fuel-efficient car purchases. Honda Motor Co Ltd and Nissan Motor Co Ltd and rose between 2.1 and 1.9 percent respectively.
Bucking the trend was NGK Insulators Ltd, which shed 8.8 percent after the maker of insulators for power utilities said it would have difficulty supplying NAS batteries - used for storing power at utilities - to Tohoku Electric Power Co Inc this summer.