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Nikkei rides falling yen to best close in six years

JIJI

The Nikkei 225 average on Tuesday rewrote its highest closing level in nearly six years, assisted by brisk purchases of export-oriented names on the back of the yen’s drop.

The Nikkei gained 94.59 points to reach 15,749.66, its best finish since Dec. 12, 2007.

The Topix closed 3.60 points higher at 1,262.54, the best closing level since May 22.

Stocks drew buying interest from the outset after the dollar climbed above ¥103 for the first time since May 23 in Tokyo trading.

The closely watched stock indexes soon trimmed their gains, dampened by profit-taking and selling on a rally amid a sense of market overheating, brokers said.

Nonetheless, the yen’s further weakening against the dollar reinvigorated stock prices and pushed the key gauges higher in the afternoon.

The easier yen spurred purchases of export-oriented issues amid growing hopes for earnings improvement, brokers said.

Hiroaki Hiwada, senior strategist at Toyo Securities Co., noted that in recent sessions the Nikkei has tended to close at levels higher than its opening levels even if it briefly comes under selling pressure.

“This signals that the Tokyo market has been underpinned by buying on dips on hopes for a further stock price rise,” he said.

“The Nikkei may test its upside to 16,000 by the end of this year,” said Hiroichi Nishi, equity general manger at SMBC Nikko Securities Inc.

Still, the market was hit by profit-taking when it approached the 15,800 line amid concerns over precariously high prices, brokers said.

“A wait-and-see mood is likely to prevail in the latter half of this week” prior to the U.S. government’s jobs data for November, due out Friday, but “an optimistic mood continues to support” the downside of stock prices, Toyo’s Hiwada said.

Despite the key indexes’ gains, falling issues outpaced rising ones 828 to 786 in the first section, while 150 issues were unchanged. Volume increased to 2.689 billion shares from Monday’s 2.306 billion.

JGBs fall further

Japanese government bonds plunged again Tuesday due to the yen’s decline and higher stock prices.

The lead December futures contract on 10-year JGBs finished down 0.19 point from Monday at 144.84.

Volume surged to 32,007 contracts from 20,694.