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Nikkei rallies on U.S. gains, month-end buying

JIJI

Stocks bounced back sharply Thursday, buoyed by hefty gains on Wall Street and purchases from fund managers attempting to spruce up their portfolios at the end of the month.

The Nikkei 225 average closed up 305.39 points, or 2.71 percent, at 11,559.36. On Wednesday, the key market gauge fell 144.84 points.

The Topix shot up 21.94 points, or 2.30 percent, to end at 975.66 after slipping 13.05 points the previous day.

Stocks got off to a robust start following an overnight advance in New York equities.

Wall Street’s gains came after U.S. Federal Reserve Chairman Ben Bernanke signaled during congressional testimony Wednesday his readiness to continue monetary easing and a solid debt auction was conducted in Italy.

Investors in Tokyo also took heart from the yen’s easing against the dollar and the euro.

After hovering at high levels, the Nikkei extended gains in late trading thanks to month-end window-dressing purchases by fund managers, brokers said.

With investor sentiment improving, the TSE was also supported by buying on dips from investors who had missed earlier opportunities to purchase stocks, brokers said.

Despite the tumbles Tuesday and Wednesday, the Nikkei managed to stay above its 25-moving average, which stood at 11,192.45 on Wednesday, an official at a major securities firm said, explaining that the market’s downside was limited.

Still, “Tokyo stocks are likely to be swayed by exchange rate swings and overseas factors, including concerns over imminent mandatory spending cuts in the United States and the Italian political situation” after the general election earlier this week, said Masayuki Otani, chief market analyst at Securities Japan Inc.

Rising issues overwhelmed falling ones 1,451 to 185 in the first section, while 63 issues were unchanged. Volume increased to 3.291 billion shares from Wednesday’s 3.119 billion.

Key yield hits new low

Japanese government bonds rose Thursday amid continued expectations of additional monetary easing, sending the key 10-year yield to a new nine-year low.

The yield on the latest 327th 10-year JGB issue with a 0.8 percent coupon was at 0.655 percent in late interdealer trading, the lowest level for a key 10-year yield since June 2003 and down from 0.675 percent late Wednesday.