tokyo 08 08, 2012, 08:50 IST
Japan's Nikkei average rose for a third day to test the psychological 9,000 level on Wednesday, powered by exporters' hopes for a new round of stimulus from central banks, while shares in struggling TV maker Sharp Corp recovered slightly.
The "risk-on" mood among investors, prompted by comments from a top Fed official, strengthened the dollar and the euro against the yen, giving a further fillip to Japanese exporters.
The Nikkei climbed 1.6 percent to 8,946.65 after the morning session, breaking above the 75-day moving average and setting its sights on the 200-day moving average at 8,956, after rallying 2.9 percent in the previous two sessions. The last time the benchmark was at 9,000-mark was in early July.
"The bad news seems to be priced in now. People are covering their shorts. People are going for names that they think are oversold," a trader at a foreign bank said. "People are now looking for quality names with high margins, like Fanuc, which is actually quite strong today."
"Shorts here are very dangerous. People are afraid that they'll get taken out by being too greedy and are covering their shorts. I don't see long buying. The longs I see are more into high dividend names."
Exporters Nissan Motor Co <7201.T>, Honda Motor Co <7267.T> and Fanuc Corp <6954.T>, an industrial robot maker, were in demand, rising between 1.7 and 3.1 percent.
Another dealer said some investors were picking up Nikkei call options with December expiry at 9,000, betting on the market pushing past this level.
Sharp Corp <6753.T> climbed as much as 8.7 percent, rebounding from a 32 percent slide in two sessions after it reported a first-quarter loss and revised its forecast to a full-year operating loss of 100 billion yen, from a previously estimated 20 billion yen operating profit.
Short interest in Sharp remained high, with 75.59 percent of its stock that is available to be borrowed out on loan as of Aug 6, according to data provider Markit, up from 73.70 percent on Aug 2 when it reported the results after the market close.
Nikon Corp <7731.T> advanced 2.9 percent after the Nikkei business newspaper reported that Intel Corp
"Japanese equities are undervalued. They are certainly cheap but there is no catalyst for a stronger performance for Japanese shares in terms of domestic economy," said Andrew Pease, chief investment strategist of Asia Pacific at Russell Investments.
According to Thomson Reuters Datastream, Japan's Topix index carried a 12-month forward price-to-earnings of 10.7 versus a 10-year average of 16.7. The U.S. S&P 500 had a 12-month forward P/E of 12.2.
PIONEER, DAINIPPON SCREEN PRESSURED
Pioneer Corp <6773.T> and Dainippon Screen Manufacturing Co Ltd <7735.T>, however, were battered after they both slashed their earnings guidance.
Dainippon Screen sagged 4.1 percent after the precision machinery maker cut its operating profit forecast for the year ending March 2013 by 77 percent, saying chipmakers and some foundries in the semiconductor industry had cut capital investment further due to slowing global growth.
Pioneer revised down its full-year operating profit by 17.7 percent to reflect the stronger yen against the euro this year and falling sales of optical disc drive-related products. The stock was down 2.8 percent after falling as much as 9.7 percent.
Japanese company earnings have been relatively weak so far this quarterly reporting season, with 53 percent of the 135 Nikkei companies missing market expectations, data from Thomson Reuters StarMine showed.
That compared with 40 percent misses in the previous quarterly earnings season.
The broader Topix <.TOPX> advanced 1.3 percent to 752.99. Trading volume on the Topix was relatively strong after the morning session, at 57 percent of its full daily average for the past 90 days.
The index is down 3.7 percent since hitting a two-month high on July 4 on concern over a deepening euro zone debt crisis and sluggish global growth, but is still 3.3 percent so far this year.
Boston Fed Bank President Eric Rosengren said on Tuesday that the Fed should launch another bond-buying programme of whatever size and duration needed to get the economy back on its feet, signalling support from some U.S. policymakers for aggressive steps to boost the flagging economy.
(Editing by Eric Meijer)
