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Nikkei recoups morning losses to edge higher

JIJI

The Nikkei 225 average recouped early losses to end modestly higher Wednesday, extending its winning-streak to a fourth trading day.

The benchmark gained 15.92 points to finish at 14,615.04, its best result since May 22. On Tuesday, it climbed 92.87 points.

The Topix rose 2.70 points to end at 1,213.24 after advancing 8.55 points Tuesday.

Profit-taking gained the upper hand in early trading on the heels of declines in European and U.S. equities overnight and a rise by the yen against the dollar and the euro.

But losses were limited as selling pressure was rather mild while investors waited for U.S. Federal Reserve Chairman Ben Bernanke’s semiannual testimony before the House Financial Services Committee later Wednesday, brokers said.

After briefly falling more than 130 points in the morning, the Nikkei gradually trimmed its losses, led by gains in index futures. The yardstick returned to positive territory in the afternoon and finished at the day’s high, helped by the yen’s easing from its intraday highs and the strength of Asian markets.

“The Tokyo market became top-heavy” after the Dow Jones industrial average snapped its three-session winning streak, said Yoshihiko Tabei, chief analyst at Kazaka Securities Co.

Tabei blamed the Dow’s setback on hawkish remarks by Federal Reserve Bank of Kansas City President Esther George, who called on the Fed to end its asset buying program by the middle of 2014.

Some technical indicators signaling the TSE has been overheating prompted players to take profits before Bernanke’s closely watched testimony, brokers said.

But Tabei said Tokyo stocks were supported by buying on dips, apparently by foreign investors.

“There are expectations that the administration of Prime Minister Shinzo Abe would be able to implement its economic policies more smoothly and improve the real economy” if the Upper House election Sunday brings an end to the divided Diet, Tabei said.

JGBs top-heavy

Japanese government bonds edged higher Wednesday, but they were top-heavy ahead of congressional testimony by U.S. Federal Reserve Chairman Ben Bernanke later in the day.

The lead September futures contract on 10-year JGBs closed up 0.11 point at 143.22. Turnover grew to 17,107 contracts from 12,278.