tokyo 08 02, 2012, 13:00 IST
Japan's Nikkei share average advanced on Thursday as investors scooped up battered stocks, while hopes for policy action from the European Central Bank offered support.
Shares that suffered steep losses on Wednesday because of disappointing earnings or forecasts recovered somewhat, with Seiko Epson Corp <6724.T> up 1.1 percent to move away from the previous day's lifetime low and Sumitomo Heavy Industries <6302.T> gaining 2.2 percent after tumbling nearly 15 percent.
Weakness in Fast Retailing Co <9983.T>, down 2.6 percent ahead of the release of its same-store sales data after the market close, limited the gains.
The Nikkei added 0.1 percent to 8,653.18, after meeting resistance around 8,687.93, the 50 percent retracement of its rally from June 4 to July 4.
"Today the earnings results aren't hitting the market as hard as yesterday - some companies are still dropping but not so violently," said Yutaka Miura, senior technical analyst of equity research at Mizuho Securities.
Kyocera Corp <6971.T> surged 5.1 percent to a two-week closing high as investors anticipated strong growth in its solar business from the second quarter following a first-quarter operating loss, caused by extraordinary losses at subsidiary AVX.
Printed circuit board maker Ibiden Corp <4062.T> was also in demand, up 8.4 percent after it said it would buy back up to 5 million or 3.3 percent of its own shares, offsetting an 80 percent cut in its net profit forecast for the half year to September due to a stronger-than-expected yen.
Sony Corp <6758.T> rose 2.4 percent ahead of its results. After the bell, the consumer electronics maker said first-quarter operating profit slid from a year earlier as it continued to struggle with weak demand for its TVs and other devices amid biting competition from foreign rivals.
Gains in Toyota Motor Corp <7203.T>, up 1.3 percent on the back of strong July U.S. sales, also supported the market. Toyota was the most-traded stock on the main board.
The broader Topix was up 0.4 percent at 732.98.
The index is still down 6.3 percent since hitting a two-month high on July 4 on concerns over the euro zone debt crisis and spluttering growth in the United States and China.
The weakness took Topix's 12-month forward price-to-book ratio to 0.81, a seven-week low, data from Thomson Reuters Datastream showed.
Nearly 1.63 billion shares changed hands on the Topix, up from Wednesday's 1.58 billion but down from last week's average of 1.68 billion.
Country equity performance: http://link.reuters.com/hew86s
HIGHER BAR
Japan's quarterly earnings season has been hit by a decline in demand in the euro zone and slower global growth.
"Expectations in the market are pretty high," said Nicholas Smith, Japan strategist at CLSA.
According to Thomson Reuters I/B/E/S, Japanese companies were expected to post an average of 70 percent year-on-year increase in earnings per share this year, versus a 6.2 percent EPS growth for S&P 500 <.INX> companies.
"This is a really, really unforgiving market at the moment," Smith said, referring to some of the sharp sell-off after companies missed market expectations with their quarterly figures.
Half of the 94 Nikkei companies that have so far reported quarterly results missed market expectations, according to Thomson Reuters StarMine. That compared with 40 percent in the previous quarter.
Investors have been expecting central banks to come to the rescue once more with further stimulus measures. The Federal Reserve disappointed on Wednesday by holding back on easing, although it said it would "provide additional accommodation as needed" to prop up the U.S. economy.
Investors are pinning their hopes on the ECB to act, in the form of buying Spanish and Italian bonds to push down the highly-indebted countries' borrowing costs, although German opposition might limit the central bank to a more modest proposal.
