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Strong ‘tankan,’ weaker yen keep Nikkei winning streak alive

JIJI

Stocks climbed Monday, supported by the yen’s weakness and a strong outcome of the Bank of Japan’s “tankan” quarterly business sentiment survey.

The Nikkei 225 average gained 175.18 points, or 1.28 percent, to close at 13,852.50. On Friday, the Nikkei closed the week with a gain of 463.77 points.

The Topix advanced 16.86 points, or 1.49 percent, to end at 1,150.70 after jumping 35.01 points Friday.

Both indexes extended their winning streak to a third session.

The market kicked off the week with modest gains on the heels of strong readings of the BOJ’s “tankan” survey for June, released just before the opening bell.

According to the survey, the most closely watched diffusion index for large manufacturers’ current business conditions stood at plus 4, compared with minus 8 in the previous survey in March, logging the first positive figure in seven quarters.

Investors also took heart from the yen’s weakening notably against the dollar, brokers said.

The Nikkei soon slipped into negative territory and showed small ups and downs for the rest of the morning session. Profit-taking pressure grew after price surges late last week, brokers said.

In the afternoon, however, the key gauge rapidly gained ground, driven by buying of index futures on the back of the yen’s renewed easing, brokers said.

The tankan’s better than expected readings brightened investor sentiment and boosted expectations for earnings recovery at Japanese companies, backed by weakness of the yen, brokers said.

With the survey, “investors were able to confirm an improvement in economic fundamentals,” said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.

Meanwhile, market participants reacted little to the Chinese manufacturing industry purchasing managers’ index for June as the results were within market expectations, brokers said.

“Investors were relieved as no negative incentives came out of China,” SBI’s Suzuki said. Last week, the market was pressured by concerns over a Chinese economic slowdown.

Rising issues far outnumbered falling ones 1,360 to 275 in the first section, while 78 issues were unchanged.

Volume decreased sharply to 2.477 billion shares from 3.190 billion Friday.

In the financial sector, banks Sumitomo Mitsui and Mitsubishi UFJ and brokerage firms Nomura and Daiwa were buoyant thanks to continued buybacks.

On the other hand, a handful of losers included mobile game producer Gree and DeNA, electronics maker Panasonic and realtor Mitsubishi Estate.

JGBs dip before auction

Japanese government bonds slid Monday, bruised by position adjustment selling prior to auctions of new JGBs this week.

The lead September contract on 10-year JGBs finished down 0.39 point from Friday at 142.31. Volume fell to 21,357 contracts from 25,074.

In late interdealer trading in cash JGBs, the yield on the latest 329th 10-year issue with a 0.8 percent coupon stood at 0.880 percent, up from 0.855 percent late Friday.