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Nikkei regains 17,000 on U.S. rebound

JIJI

Stocks staged a sharp rally on the Tokyo Stock Exchange on Wednesday following an overnight rebound in U.S. equities, with the Nikkei ending above 17,000.

The Nikkei surged 455.02 points, or 2.72 percent, to close at 17,163.92. On Tuesday, it lost 402.01 points.

The Topix finished up 40.47 points, or 2.98 percent, at 1,400.70, after falling 32.40 points the previous day.

The Tokyo market got off to a firmer start after the Dow Jones industrial average turned sharply higher on Tuesday thanks to solid crude oil futures prices in New York.

Export-oriented issues, such as automakers and electronics producers, attracted purchases as investor sentiment improved on the back of stronger-than-expected readings of the U.S. Conference Board’s consumer confidence index for January, brisk corporate earnings in the United States and the yen’s fall, brokers said.

The market accelerated its upswing by the middle of the morning session, briefly pushing up the Nikkei by more than 530 points.

After being weighed down in the early afternoon session by concern over weaker Shanghai shares, Tokyo stocks drew buybacks and regained upward momentum toward the close, according to brokers.

“The sharp rebound reflected a lack of selling in thin trading” as investors retreated to the sidelines to see the results of the U.S. Federal Reserve’s two-day Federal Open Market Committee meeting through Wednesday and the Bank of Japan’s Policy Board meeting later this week, an official of a bank-affiliated securities firm said.

“A Fed statement to be issued after the FOMC meeting will be closely watched” amid growing speculation that the U.S. central bank will delay a second interest rate hike after December’s increase, said Kenichi Hirano, market analyst at K Asset Co.

“If the Fed statement is too bullish or bearish about the U.S. economy after the recent financial market turbulence, investors will be disappointed,” Hirano said.

Rising issues overwhelmed falling ones 1,831 to 78 in the TSE’s first section, while 24 issues were unchanged.

Volume grew to 2,257 million shares from Tuesday’s 2,157 million shares.

Among automakers, Daihatsu and Toyota surged on news reports that Toyota is considering taking full control of Daihatsu.

Another automaker Suzuki also jumped on a newspaper report that it has started talks with Toyota on a business tie-up, market sources said.

Mobile phone carrier Softbank Group rose sharply after U.S. subsidiary Sprint surged in the U.S. market Tuesday on a smaller net loss for October-December.

Banking groups Mitsubishi UFJ and Mizuho gained ground thanks to buybacks a day after peer Sumitomo Mitsui logged stronger-than-expected earnings.

Higher crude oil prices helped lift oil companies, such as JX Holdings and Inpex.

Also on the plus side were electronics giant Sony, industrial robot producer Fanuc and clothing store chain operator Fast Retailing.

By contrast, electronic parts producer Alps Electric and game maker Nintendo were downbeat.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average ended 510 points higher at 17,170.