July 13, 2018 / 3:19 AM / 4 months ago

Nikkei rises to 2-1/2-week high; Fast Retailing jumps

* Nikkei has gained 3.2 pct for the week

* Fast Retailing jumps, adds hefty positive points to Nikkei

* NT ratio hits highest since Dec 1998

By Ayai Tomisawa

TOKYO, July 13 (Reuters) - Japan’s Nikkei surged to 2-1/2-week highs on Friday, helped by a weaker yen and gains from index-heavy stock Fast Retailing after it jumped on the back of strong third-quarter results.

The Nikkei share average soared 1.3 percent to 22,481.13 in midmorning trade, after rising as high as 22,530.19, its strongest since June 25. The benchmark index has gained 3.2 percent for the week so far and is set to snap a three-week losing streak.

Fast Retailing, operator of Uniqlo clothing stores, jumped 6.0 percent after its third-quarter operating profit surged 37 percent to a record 68.4 billion yen thanks to brisk sales at its overseas Uniqlo stores.

The stock added a hefty 113 positive points to the Nikkei.

The broader Topix, however, was just up 0.7 percent at 1,722.31.

The Nikkei’s outperformance led the Nikkei versus Topix, the so-called NT ratio, to 13.07, the highest since December 1998.

Analysts attributed the Topix’s underperformance to large-cap banks as their profits have been squeezed amid the country’s low-interest rate environment. They also said index-heavy stocks included in the Nikkei, such as Fast Retailing Co and SoftBank Group, tend to influence the benchmark index’s direction, when there is specific news linked to the companies.

Yutaka Miura, a senior technical analyst at Mizuho Securities, said that a weaker yen had also provided support to the Nikkei’s performance over the past few days.

“When the yen weakens, the Nikkei futures are bought automatically. It is much like Pavlov’s dog,” Miura said referring to Russian physiologist Ivan Pavlov’s theory of classical conditioning, when dogs automatically salivate when they hear a bell.

The dollar rose 0.2 percent and hit a fresh six-month high against the yen of 112.71 early on Friday. A weaker yen tends to help Japanese exporters’ profits made abroad when repatriated.

Also supporting sentiment is strong U.S. stock futures, with S&P500 e-mini futures rose 0.15 percent to hit a five-month high on Friday, pointing to strong opening in U.S. stocks later in the day.

Yaskawa Electric was volatile, falling 4.2 percent before rising as much as 3.7 percent in early trade as its March-May results were seen containing both positives and negatives.

The company’s operating profit jumped 30 percent on the year to 17.2 billion yen helped by strong sales in motion controller and robotics automation products. However, it disappointed the market by having a negative outlook on orders for AC servo motors, which have high margins, hit by the impact of slowing smartphone demand in China.

“The overall result was neutral, but the stock seems to have reacted to the negative risk,” said Yoshihiro Okumura, general manager at Chibagin Asset Management.

Tech shares gained ground, with Advantest Corp rising 1.9 percent and TDK Corp advancing 1.4 percent. (Editing by Jacqueline Wong)

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