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Nikkei rallies on buybacks and buying on dips

JIJI

Stocks rebounded sharply Tuesday, buoyed by buybacks and buying on dips after recent selloffs.

The Nikkei 225 average climbed 154.28 points, or 0.99 percent, to end at 15,795.96 and snap a three-session losing streak. On Monday, the key market gauge slumped 92.78 points.

The Topix finished 2.09 points higher at 1,295.95 after falling 3.53 points Monday.

From the opening bell investors repurchased and bought on dips stocks that were undervalued after the recent falls. They also took heart from the yen’s weakening past 104.50 to the dollar, brokers said.

The Nikkei was driven higher by heavily weighted component issues, such as clothing retailer Fast Retailing and robot maker Fanuc.

The key market yardstick extended gains in the early afternoon thanks to futures-led buying after the yen lost further ground against the dollar, brokers said.

Stock prices hovered at high levels for the rest of the afternoon session as some selling to lock in profits weighed on the TSE’s upside prior to the release Wednesday of the outcome of the Bank of Japan’s two-day Policy Board meeting, brokers said.

Most analysts expect the BOJ to keep its monetary policy unchanged. But if the policymakers raise their economic growth and price forecasts, “it will be a positive incentive” for the stock market, said Ayako Terada of Nomura Securities Co.’s investment research and investor services department.

The Nikkei briefly surged more than 250 points in early afternoon trading, but buying did not spread to the broader market and falling issues outnumbered rising ones.

“Investors are waiting for the next incentives” amid persistent expectations for higher stock prices ahead, said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc.

An official at a major securities firm said investors are trying to decide whether the market’s current correction phase will end soon or continue.

Corporate earnings reports, which will kick off in earnest next week, are considered the key to the course of the market.

JGBs fall back

Japanese government bonds turned lower Tuesday as stocks regained ground on renewed risk appetite thanks to the yen’s fall.

The lead March futures contract on 10-year JGBs ended down 0.27 point at 144.03, near the day’s low of 144.02. Turnover increased to 30,116 contracts from Monday’s 16,113.