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Nikkei reverses morning losses as yen weakens

JIJI

Stocks staged a rebound Tuesday, buoyed by buybacks thanks to the yen’s weakness against the dollar and the euro.

The Nikkei 225 rose 169.33 points, or 1.20 percent, to finish at 14,311.98. On Monday, the key market gauge plunged 469.80 points.

The Topix gained 14.20 points, or 1.23 percent, to end at 1,168.27 after losing 40.01 points Monday.

Stocks were hit at the opening by selling of export-oriented issues, such as electronics makers and automakers, on the back of the yen’s strength. The Nikkei briefly slipped below 14,000 with a loss of nearly 200 points.

After the initial selling ran its course, however, the key indexes quickly popped up into positive territory, helped by buybacks mainly for automakers such as Toyota as the yen turned lower against other major currencies.

Investors retreated to the sidelines in the afternoon, waiting to see the U.S. market’s performance later Tuesday after the long weekend, brokers said.

The TSE seemed to regain some composure after wild swings late last week, brokers said.

Not only foreign investors but also domestic individual investors bought back issues that were undervalued after the recent tumbles, brokers said.

But the market’s rise Tuesday is just a technical rebound, Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc., said.

“Investors consider the downside of the Nikkei is around 14,000,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

The Nikkei may slip below 14,000 on an intraday basis, but it will likely maintain the key line on a closing basis, Miura added.

Rising issues outnumbered falling ones 893 to 737 on the first section, while 85 issues were unchanged. Volume increased to 4.205 billion shares from Monday’s 3.979 billion.

Toyota rocketed 4.90 percent, a day after Mitsubishi UFJ Morgan Stanley Securities upgraded its stock price target for the automaker to ¥9,200 from ¥7,800, brokers said.

20-year bonds weak

Japanese government bonds fell back Tuesday on a rebound in stocks and weak results in an auction of new 20-year JGBs.

In late interdealer trading in cash JGBs, the yield on the latest 328th 10-year issue with a 0.6 percent coupon stood at 0.905 percent, up from 0.830 percent late Monday.