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Nikkei rebounds on yen fall, overseas stock rise

JIJI

Stocks staged a sharp rebound Wednesday, thanks to higher stock prices abroad overnight and the yen’s weakening amid receding worries about emerging economies.

The Nikkei 225 average gained 403.75 points, or 2.70 percent, to end at the day’s high of 15,383.91 and snap a four-day losing streak.

The Topix ended 31.87 points, or 2.60 percent, higher at 1,256.18.

Stocks got off to a robust start following recoveries of the U.S. and European markets on Tuesday. The Dow Jones industrial average rebounded after a five-session fall as concerns about erosion of emerging economies’ currencies faded away.

Investors took heart particularly from the Turkish central bank raising its key interest rate overnight by a sharp 4.25 percentage points to 12 percent in a move to support the lira, which already dropped to record-low levels, brokers said.

The substantial rate increase helped the yen fall against the dollar and other major currencies, thus underpinning the stock market, they said.

Though the market turned to show only minor fluctuations after the initial buying ran its course, it resumed heading north partly on futures-led buying in the afternoon.

Turkey’s bigger than expected rate hike has reversed, at least to some extent, the fund flow to the safe-haven yen, said Takuya Takahashi, senior strategist at Daiwa Securities Co. The move specifically relieved Japanese investors, who were in a strong risk-off mood in recent sessions, he added.

Now that the worst phase of the currency problem is over, players were waiting to see whether the U.S. Federal Reserve would decide as expected to taper its asset purchases by an additional $10 billion at its two-day policy meeting ending later in the day, brokers said.

Besides the policy action, “the Fed’s statement after the meeting on the current state of the U.S. economy is particularly interesting,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc.

JGBs suffer setback

Japanese government bonds fell Wednesday, partly because of higher stock prices and the yen’s decline.

The lead March futures contract on 10-year JGBs closed down 0.11 point from Tuesday at 144.55.

Volume rose to 32,528 contracts from 23,787.