Nikkei ends turbulent year at 21-month high

Abe-sparked yen drop spurs rebound hopes for exporters

Kyodo

Tokyo stocks rose for a fourth consecutive session Friday, allowing the Nikkei index to end the year at a 21-month high as expectations for aggressive monetary easing by new Prime Minister Shinzo Abe continued to weaken the yen.

The 225-issue benchmark average gained 72.20 points, or 0.70 percent, to close at 10,395.18, its highest since March 10, 2011, the day before the Great East Japan Earthquake struck off the coast of Tohoku.

The Nikkei was up 23 percent from the end of 2011, posting its first year-on-year rise in three years and its largest annual percentage gain since 2005, when it grew by 40 percent.

It was also the first time since 1999 that the Nikkei peaked at the end of a year.

The Tokyo Stock Exchange’s broader Topix index of all first section issues gained 5.71 points, or 0.67 percent, to close at 859.80.

Exporters’ shares fared well, with makers of automobiles, tires and miscellaneous products leading the way. Utilities, airlines and drug makers posted losses.

Volume fell to 2.892 billion shares from Thursday’s 3.469 billion.

Market players again took a cue from the yen’s fall after Wall Street stocks stayed under selling pressure overnight amid worries about the looming “fiscal cliff.”

The yen sank to its lowest against the dollar in about two years and five months as expectations rose that the Bank of Japan will act more boldly in the coming months under pressure from Abe’s new government.

The yen also fell against the euro, brightening the outlook for exporters’ earnings.

“There is a popular view in the market that Japanese companies will get a huge boost from this foreign-exchange factor, especially in fiscal 2013,” said Hiroichi Nishi, assistant general manager of equity research at SMBC Nikko Securities Inc.

“Things may get even better for Tokyo stocks if the United States can avert the fiscal cliff and Wall Street stocks rebound strongly,” Nishi added.

The TSE will be closed until Jan. 3 for the traditional yearend and New Year’s holidays.

Global investors are keeping close tabs on U.S. budget talks aimed at averting the fiscal cliff of tax hikes and spending cuts set to take effect at the start of 2013.

“The chances of reaching a deal might be 50-50, but even if the U.S. goes off the fiscal cliff, stocks are unlikely to suffer a free-fall,” said Takashi Hiroki, chief strategist at Monex Inc.

“Wall Street stocks have already fallen a lot on fear-triggered selling,” he added. “The magnitude of a potential fall off the cliff has been exaggerated. It’s just the end of tax cuts. The impact won’t be as bad as people fear.”