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Olympic Games fever propels Nikkei higher

JIJI

Stocks gained ground Tuesday, helped by overnight strength in U.S. equities and a continuing festive mood after Tokyo’s successful bid to host the 2020 Summer Olympics.

The Nikkei 225 closed up 218.13 points, or 1.54 percent, at 14,423.36, its highest finish since Aug. 2. The broader Topix rose 17.22 points, or 1.47 percent, to end at 1,190.22.

A wide range of issues advanced on the heels of rises in U.S. stocks thanks to an improvement of investor sentiment.

Shares of infrastructure companies continued drawing buying, including construction firms, cement makers and real estate developers.

After rising above 14,400 for the first time in around a month, the Nikkei trimmed its gains in the late morning. But the market regained upward momentum in late trading, helped partly by the release of positive Chinese economic data.

Investors appeared to sell some small capital and low-priced issues that had logged major gains recently, opting for Olympics-related stocks instead.

But Yoshihiko Tabei at Kazaka Securities Co. said the sectors on which the 2020 Tokyo Games are expected to have knock-on effects have so far underperformed infrastructure-related issues, which are being supported by expectations of an increase in actual demand on the back of public works projects.

“This is probably because the ripple effects on such sectors are hard to predict clearly,” Tabei said. He added that certain infrastructure industry stocks “have already been overbought in terms of price earnings ratio and may be ripe for profit-taking.”

Better than expected Chinese industrial production and retail sales data for August provided additional support for the Tokyo market, although investors remain worried about the civil war in Syria and the course of U.S. monetary policy as Washington contemplates armed intervention.

Advancers far outnumbered losers 1,310 to 352 on the first section, while volume ballooned to 4.230 billion shares from Monday’s 2.937 billion.

JGBs rise further

Japanese government bonds advanced further Tuesday, as investors took heart from solid demand for new 30-year JGBs.

The new lead December contract on 10-year JGBs closed up 0.24 point from Monday at 143.53.

Volume grew to 40,433 contracts from 36,265.