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Nikkei gets a lift from Wall Street surge, yen drop

JIJI

Stocks bounced back Wednesday after a jump on Wall Street and a dip in the yen’s strength.

The Nikkei 225 average gained 176.37 points, or 1.23 percent, to close at 14,502.35. On Tuesday, the key market gauge shed 70.06 points. The Topix ended 11.00 points higher at 1,204.50 a day after losing 4.86 points.

Stocks traded higher from the outset of trading after the Dow Jones industrial average hit a record closing high in New York on Tuesday on expectations that the Federal Reserve will keep its current quantitative easing.

A weaker yen also lifted investor sentiment, driving the Nikkei up by more than 200 points to a one-week high in the morning.

With the U.S. market rising to record levels, there is growing optimism that the global economy is on a recovery track, an official at a bank-affiliated brokerage said. Excess funds may flow into to risk assets, such as equities, the official said.

Yutaka Miura, senior technical analyst at Mizuho Securities Co., said, however, that the TSE’s topside was capped in part by moves to close out long margin positions facing six-month settlement deadlines.

Although the yen’s slide against other major currencies prompted a relief rally, the Nikkei failed to gain further ground as the yen was still hovering around levels slightly above 98 per dollar and not dropping further, Miura said.

The yen is also under upward pressure as the Fed is expected to keep its quantitative easing policy in place at its two-day meeting through Wednesday, brokers said.

But the TSE is still supported by lingering hopes for good half-year corporate earnings reports, including upward revisions of their full-year outlooks, which would give a boost to individual shares, they said.

Winners outnumbered losers 1,067 to 598 in the first section, while 89 issues were unchanged. Volume rose to 3.480 billion shares from 2.903 billion Tuesday.

Key 10-year yield drops

Japanese government bonds climbed Wednesday, pushing the benchmark 10-year yield down to a five-month low.

JGBs were lifted thanks partly to overnight gains in U.S. Treasuries and the Bank of Japan’s buying operations, traders said.

In late interdealer trading, the yield on the latest 330th 10-year issue with a 0.8 percent coupon was at 0.590 percent, the lowest level for the benchmark yield since May 9 and down from 0.605 percent late Tuesday.