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Nikkei rises again as Yellen fuels risk appetite

JIJI

Stocks rose Wednesday for the third straight session after U.S. equities were boosted by new Federal Reserve Chairwoman Janet Yellen’s assurances that the zero interest rate policy will continue.

The Nikkei 225 average rose 81.72 points to finish at 14,800.06 after surging 255.93 points Monday. The TSE was closed Tuesday for National Foundation Day.

The Topix ended up 15.32 points at 1,219.60 after rising 15.14 points Monday.

The market got off to an upbeat start after New York stocks gained strongly in overnight trading. At a House Financial Services Committee hearing, Yellen said the Fed will stay on course to continue winding down its asset purchases but suggested that interest rates will remain very low for some time.

Yellen also said that the Fed expects the U.S. economy to expand at a moderate pace in 2014 and 2015, which provided relief to investors and pushed up Wall Street, brokers said.

Investors in Tokyo also took heart from news that the U.S. House voted to raise the government’s borrowing limit until March 2015 and avoid default, brokers said.

Yellen’s testimony helped reduce uncertainty over the course of the U.S. economy, making investors more comfortable to take risks, an official at a bank-affiliated brokerage firm said.

Investor sentiment was also underpinned by an improvement in China’s trade figures for January, which showed a stronger than expected rise in both exports and imports, offsetting the dent caused by sluggish Japanese machinery orders data for December released earlier in the day, one market source said.

Buoyant bourses in Asia also supported Tokyo stocks, brokers said.

The Nikkei, however, shed some of the earlier gains toward the end of the session due in part to profit-taking, brokers said.

Kenji Shiomura, senior strategist at Daiwa Securities Co., said the rise can still be considered a rebound after recent sharp falls. For the market to gain further ground, it will need additional incentives, he said.

JGBs fall with T-bills

Japanese government bonds fell Wednesday after U.S. Treasury bonds lost ground overnight following congressional testimony by new Fed Chairwoman Janet Yellen.

The lead March futures contract on 10-year JGBs closed down 0.06 point from Monday at 144.79. Volume rose to 16,783 contracts from 14,567.