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Nikkei advances after Wall Street jumps on employment data

JIJI

Stocks gained ground Monday, helped by bullish New York equities late last week thanks to a jobs recovery in key U.S. industry sectors.

The Nikkei 225 average gained 255.93 points, or 1.77 percent, to end at 14,718.34. The Topix finished 15.14 points, or 1.27 percent, higher at 1,204.28.

The TSE kicked off the week with sharp gains, tracking an advance Friday on Wall Street. The Dow Jones industrial average rose more than 1 percent after employment data for January showed improvements in the manufacturing and construction industries, key drivers of the U.S. economy.

Although the increase in nonfarm payrolls fell short of the market’s projection, growing by 113,000 against the estimate of 185,000, market players were relieved to see some signs of recovery in the U.S. economy, analysts said. The unemployment rate dropped to 6.6 percent.

In Tokyo, investors were also encouraged to step up purchases after former health minister Yoichi Masuzoe, backed by the local chapters of the ruling Liberal Democratic Party and New Komeito, sailed to victory in Sunday’s Tokyo gubernatorial election.

The yen’s continued slide against major counterparts also prompted buybacks, brokers said.

After the initial buying ran its course, however, the market’s upside was limited, weighed down by selling to cash in gains, brokers said.

The U.S stock market rose thanks to improved investor sentiment rather than the falling unemployment rate and a rising labor participation rate, an official at a major brokerage firm noted.

The rise in Tokyo stock prices, however, was still within a range of technical rebound after the recent sharp drop, Takuya Takahashi, senior strategist at Daiwa Securities Co., said.

Investors were keenly awaiting congressional testimony Tuesday by new Federal Reserve Chairwoman Janet Yellen, Takahashi said, adding that any mention of flexibility in the U.S. central bank’s monetary policy, based on her understanding of economic fundamentals, would be a plus for the stock market.

Rising issues outnumbered falling ones 1,410 to 304 in the first section, while 66 issues were unchanged.

Volume dwindled to 2.180 billion shares from 2.692 billion Friday.

By contrast, electric power firms suffered losses, with Tokyo Electric plunging more than 2 percent and Kansai Electric falling 1.73 percent. Investors locked in recent gains underpinned by growing expectations that a Masuzoe victory in the Tokyo governor race would pave the way for the restart of some idled nuclear reactors in line with the policy of Prime Minister Shinzo Abe, analysts said.

JGBs top-heavy

Japanese government bonds gained ground Monday but were top-heavy.

The lead March futures contract on 10-year JGBs closed up 0.15 point from Friday at 144.85. Volume plunged to 14,567 contracts from 28,875.

In late interdealer trading in cash JGBs, the yield on the latest 332nd 10-year issue with a 0.6 percent coupon stood at 0.605 percent, down from 0.615 percent late Friday.

JGBs attracted buying from the outset after the weaker than expected results of U.S. jobs data for January boosted U.S. Treasuries on Friday.