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Nikkei breaches 10,000 to fresh 7-month high

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Reuters Tokyo

Japan's Nikkei share average broke above 10,000 to a fresh seven-month high on Monday, boosted by another robust US jobs report that signalled a strengthening US economic recovery, while technical factors pointed to the index heading higher.

Friday's non-farm payrolls data also lifted the dollar as far as 82.64 yen, its highest in nearly 11 months, boosting the appeal of Japanese exporters' stocks to investors.

The weaker yen combined with improving Chinese demand and the prospects of lower iron ore prices to make steelmakers one of the top-performing sectors, up 0.8%.

JFE Holdings Inc climbed 2%, Kyoei Steel Ltd advanced 1.3% and Kobe Steel Ltd rose 2.3%.

The Nikkei was up 0.2% at 9,948.07, after climbing as high as 10,021.51, its highest since early August, before succumbing to profit-taking.

"Despite the fact that the yen did weaken quite considerably over the weekend, it is a little bit surprising to see there is no follow-through in equities as much today," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.

"But I think it's understandable that investors are waiting ahead of the BOJ and FOMC tomorrow, even though it does appear expectations are for very little action," he said, referring to policy-setting meetings by the Bank of Japan and the US Federal Reserve.

Bullish signals from slow stochastics and the moving average convergence-divergence, both short-term momentum indicators, reinforced the positive fundamentals.

Global equities have been buoyed by a run of strong US economic data and accommodative monetary policies by global central banks that have sent investors back into risk assets.

But Nomura expected a short-term setback for the Nikkei after rallying more than 17% since the start of the year.

"Owing to a lack of temporal corrections, we expect Japanese equities to correct to as low as 9,400-9,500 in the near term, but to head for 10,200-10,500 by around April as they wrap up the three-leg uptrend launched in November last year," Nomura said in a note.

The broader Topix added 0.1% to 849.39 on Monday.

 

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First Published: Mar 12 2012 | 8:33 AM IST

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