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Nikkei rockets 318 points higher as yen weakens

JIJI

Stocks advanced sharply Tuesday, thanks mostly to futures-led buying on the back of a weakening yen, pushing up the key indexes to the highest closing levels in three weeks.

The Nikkei 225 average gained a whopping 318.84 points, or 2.23 percent, to end at 14,588.68, the highest close since Oct. 22.

The Topix rose 19.76 points, or 1.67 percent, to close at 1,205.41, also the highest since Oct. 22.

The Nikkei quickly spurted after a dull start, as investors cheered the yen’s depreciation against major counterparts, with the dollar soaring to the highest level against the yen in almost two months.

A bullish U.S. equity market also helped buoy Tokyo stocks, brokers said. On Monday, the benchmark Dow Jones industrial average closed at a fresh record high.

Market players were encouraged by the yen edging very close to 100 to the dollar, said Masashi Oguchi of Mito Securities Co.’s investment information department.

With U.S. interest rates rising after the jobs report last Friday, the yen will likely remain under downward pressure against the dollar for the time being, although its future course will depend on the timing of the Federal Reserve’s decision to wind down its asset purchases, he said.

The TSE is being supported by lingering expectations for further earnings growth at Japanese companies beyond their outlooks as the yen gradually depreciates, an official at a bank-affiliated brokerage said. In addition, there is growing hope that the recovery in the U.S. economy has been gathering pace, he said.

Technical charts are showing buy signals for Japanese stocks, with the Nikkei breaking above its 25-day moving average after recent stagnation, brokers said.

Rising issues topped falling ones 1,477 to 210 in the first section, while 70 issues were unchanged. Volume rose to 2.575 billion shares from 2.198 billion Monday.

Stocks rose across the board, with all of the 33 first-section subindexes gaining ground.

KDDI spiked 5.11 percent while rival SoftBank also continued to climb higher. The weaker yen also buoyed automakers.

JGBs move lower again

Japanese government bonds fell Tuesday amid the sharp stock market rally and the yen’s further weakening.

In late interdealer trading in cash JGBs, the yield on the latest 331st 10-year issue with a 0.6 percent coupon stood at 0.600 percent, up from 0.590 percent late Monday.ttt