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Nikkei shoots past 9,700 barrier on weaker yen

JIJI

Stocks surged Thursday, led mainly by export-oriented issues on the back of the yen’s continued fall, with the Nikkei 225 average ending at its highest level in more than eight months.

The Nikkei rose 161.27 points, or 1.68 percent, to end the session at 9,742.73, the first time it closed above 9,700 since April 5.

The Topix gained 7.92 points, or 1 percent, to finish at 799.21 after briefly topping 800 for the first time since May 1.

The market got off to a strong start following the yen’s drop in overseas markets and the U.S. Federal Reserve’s decision Wednesday to strengthen quantitative monetary easing.

Stocks extended gains in active trading as the yen eased further against the dollar and euro in Tokyo on hopes that the Bank of Japan will take more monetary easing steps at its policy-setting meeting next week, brokers said.

The yen fell past 83.50 to the dollar for the first time in about nine months and dropped past 109 to the euro, the lowest level since early April. The yen’s weakness raised hopes for an improvement in Japanese exporters’ earnings, brokers said.

The Nikkei briefly rose more than 1.94 percent in the early afternoon before retreating toward the end of the session due to wariness over the rapid pace of the current rally.

“Gains in index futures seemingly caused by hedge buying from investors who had sold call options prompted arbitrage trades involving selling of futures and buying of cash stocks,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc. “Such trades boosted the Nikkei further in the late morning and the early afternoon.”

The Fed’s action raised expectations that the U.S. economy will be underpinned and anticipation for additional steps by the BOJ, brokers said.

“The market is likely to rise further in view of continued buying by foreign investors,” Nishi noted.

Winners outnumbered losers 973 to 558 in the first section, while 160 issues were unchanged. Volume swelled to 2.769 billion shares from Wednesday’s 1.939 billion.

JGBs take a dive

Japanese government bonds tumbled Thursday following an overnight drop in U.S. Treasury securities traced to the Federal Reserve’s decision to strengthen monetary easing.

The March contract on 10-year JGBs lost 0.30 point from Wednesday to end at 144.40. Volume hit 31,625 contracts from 20,253.