TOKYO Japan's Nikkei share average gained 1.3 percent on Wednesday morning as the yen eased to a one-month low against the euro and dollar and as Goldman Sachs's (GS.N) impressive revenues helped dampen fears about disappointing earnings.
Exporters such as Toyota Motor Corp (7203.T) were given a leg up after the yen hit 103.51 versus the euro as rating agency Moody's stopped short of downgrading Spanish bonds to "junk" status, affirming them at BAA3 in light of the ECB's promise to buy the bonds if needed.
"The softer yen is the biggest factor today...This could be a turning point, but it's really too early to tell," said Yasuo Sakuma, portfolio manager and executive officer at Bayview Asset Management.
"If the won and the euro continue to get stronger I think sentiment might become a bit more 'risk on'," he added, as the yen struck a 5-1/2 month low against the Korean currency.
A strong yen has prompted fears of further cuts to earnings forecasts for exporters as it erodes their revenues garnered abroad once repatriated. Its retreat on Wednesday helped Toyota add 1.5 percent after the share dropped 3.6 percent last week.
Hitachi Ltd (6501.T) was up 2.9 percent and was the third-most traded stock on the main board by turnover, just behind Toyota, after JPMorgan reiterated its "overweight" rating, saying it was likely to meet its 2012 operating profit forecast.
Those gains helped the Nikkei .N225 advance 115.57 points percent to 8,816.88, its highest level in a week and above its 14-day moving average at 8,741.81.
Following upbeat earnings from Citigroup Inc (C.N) in the previous session, Goldman Sachs beat expectations overnight as its revenue more than doubled and it raised its quarterly dividend.
The securities sector .ISECU.T jumped 2.3 percent, and even news that Nomura Holdings Inc (8604.T) will have to pay a 300 million yen ($3.8 million) fine for leaking information could not dent its advance of 2.9 percent.
"I think that the weakness in the global economy and the expectations of poor earnings were pretty much priced in last week and now we're recovering from that sell-off," said Masayuki Otani, chief market analyst at Securities Japan.
"Consensus cooled down quite a lot and now people are realizing it might have gone too far."
A YEN FOR BUYING
The benchmark dropped 3.7 percent last week, its biggest weekly fall since May, after a stream of profit warnings sparked fears of earnings coming in lower than expected, due to a global slowdown, anti-Japanese sentiment and the robust yen.
Prime Minister Noda is to hold an extraordinary cabinet meeting later in the day to instruct ministers to draw up an emergency economic stimulus as the economy cools, according to local media, including strategies to weaken the yen.
"It's hard to say without seeing the details of their plan but they'll likely only have 1 trillion yen to play with... the effect would therefore be limited," said Otani of Securities Japan.
Although exporters feel the pain from a strong yen, some Japanese firms have begun using the robust currency and low borrowing rates to their advantage, snapping up foreign firms at reasonable prices.
This trend was brought into focus by Softbank Corp's (9984.T) $20 billion deal to buy a 70 percent stake in Sprint Nextel Corp (S.N), announced this week.
The mobile provider, an index heavyweight, added 3.3 percent on Wednesday morning to extend Tuesday's 9.6 percent rise on CEO Masayoshi Son's assurance that the move would not dilute Softbank shares. The shares dropped 20 percent over Friday and Monday on uncertainty about how the deal would be funded.
Also on Wednesday, major trading house Mitsubishi Corp (8058.T) added 0.8 percent after the Nikkei daily said it would buy a 20 percent stake in Indonesian utility Star Energy for $200 million, aiming to double capacity of a geothermal plant in West Java by 2017.
Elsewhere, chipmakers sagged after Intel Corp (INTC.O), the world's largest chipmaker, forecast gross margins for the current quarter below expectations.
Tokyo Electron Limited (8035.T), Ibiden Co Ltd (4062.T) and Advantest Corp (6857.T) fell between 0.7 and 3.6 percent.
The broader Topix .TOPX added 1.1 percent to 740.78 in relatively strong trade, with volume at 55.2 percent of its full day 90-day average.
($1 = 78.9000 Japanese yen)
(Editing by Eric Meijer)