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Nikkei rallies past 14,000 on positive China data

JIJI

Stocks rebounded sharply on buybacks Thursday, helped partly by a weakening of the yen and better than expected Chinese economic data, with the Nikkei 225 retaking the 14,000 line.

The Nikkei jumped 337.45 points, or 2.47 percent, to close at 14,005.77, finishing above 14,000 for the first time since July 26. On Wednesday, the gauge dropped 201.50 points. The Topix rose 31.69 points, or 2.80 percent, to end at 1,163.39 after slipping 16.83 points Wednesday.

After meandering without direction around the previous day’s closing level, the Nikkei gradually extended gains, buoyed by the Chinese government’s purchasing managers’ indexes for the manufacturing sector for July, which surpassed the boom-or-bust line of 50 and beat market expectations.

Stocks accelerated their upswing in the afternoon, led by index futures, mainly thanks to the yen’s falls against the dollar and the euro and higher stock prices in Asia following the Chinese data.

The Chinese PMI data soothed wariness over the course of the world’s second-largest economy, brokers said.

“The Chinese government’s decision to accelerate infrastructure construction in urban areas of the country also helped relieve investors,” said Hideyuki Suzuki, general manager and head of the investment market research department at SBI Securities Co.

Suzuki also said a flurry of decent corporate earnings reports released this week have improved investor sentiment.

After the end of key U.S. events Wednesday, including the Federal Reserve’s policy-setting meeting and the release of gross domestic product data for April-June, market players found it easier to step up buying, brokers said.

Suzuki said the closely watched Fed meeting statement gave no new hint about when the U.S. central bank will start tapering its asset buying program, adding that the TSE is expected to lack direction throughout the first half of August amid a dearth of major trading incentives.

Winners topped losers 1,389 to 291 on the first section, while 73 issues were unchanged. Volume rose to 2.609 billion shares.

JGB futures decline

Japanese government bond futures edged lower Thursday despite the day’s smooth auction of a new 10-year JGB issue.

The lead September contract on 10-year JGBs finished down 0.01 point from Wednesday at 143.61.

Turnover grew to 25,513 contracts from 16,937.