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Nikkei edges higher, extend gains on EU decision
July 2, 2012 / 1:58 AM / 5 years ago

Nikkei edges higher, extend gains on EU decision

* Momentum from EU decision continues to buoy stocks
    * Cyclical shares such as shippers in favour
    * Analyst said he had expected bigger gains

    By Sophie Knight
    TOKYO, July 2 (Reuters) - Japan's Nikkei share average edged
up in early trade on Monday, extending gains made after euro
zone leaders agreed to stabilise the region's banks and also
helped by data showing Japanese manufacturing sentiment has
improved.
    Trading companies, steel and shipmakers were in favour while
defensive shares such as pharmaceuticals were given the cold
shoulder.
    "I expected bigger gains considering the positive surprise
of the EU decision -- the Nikkei has the momentum to at least
recover half of its slide from its March high to its June low,"
said Masayuki Otani, chief market analyst at Securities Japan. 
    The Nikkei rose 0.3 percent to 9,033.36 and a 50 percent
retracement of its fall from March 27 to June 4 would take it to
9,243.
    The gains build on Friday's 1.5 percent advance to above the
9,000 for the first time in 7 weeks but the benchmark index
still ended the second quarter down 10.7 percent, its worst
quarterly performance since last year's July-September period.
    The broader Topix index also put on 0.3 percent, to
772.08.
    Japanese manufacturers' business mood improved in the
April-June quarter for the first time in three quarters, as
reconstruction in the area worst affected by last year's tsunami
makes progress, the central bank's tankan survey showed.
    That lifted steelmakers and other construction-related
companies, with Kobe Steel Ltd climbing 2.1 percent and
Tokyo Steel Manufacturing Co Ltd rising 2.4 percent.
    The shipping sector was the biggest outperformer with Nippon
Yusen putting on 3.4 percent and Kawasaki Kisen Kaisha
Ltd gaining 1.9 percent.
    Data from China showing industrial activity at its lowest
level for seven months at the weekend was offset by the euro
zone leaders' agreement that the region's banks can be
recapitalized directly from a rescue fund without adding to
government debt. 
     "The Chinese news is disappointing but it was also
expected, and I don't think it will affect market sentiment too
much," said Toshiyuki Kanayama, senior market analyst at Monex
Inc.
    "The Nikkei breaking above its 200-day moving average of
8,942.99 was a kind of confirmation that we are on an upwards
swing."
    Investors are now looking toward a European Central Bank
meeting on Thursday, with the market expecting the bank will cut
its main refinancing rate and that it may reduce its deposit
rate.

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