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Nikkei surges 360 points on resurgent oil

JIJI

Stocks rebounded sharply on the Tokyo Stock Exchange on Thursday, boosted by purchases on the back of a rise in crude oil prices and strong Asian stocks.

The Nikkei average jumped 360.44 points, or 2.28 percent, to end at 16,196.80. On Wednesday, it slumped 218.07 points.

The Topix closed up 28.80 points, or 2.25 percent, at 1,311.20, after falling 14.61 points the previous day.

The Tokyo market rose almost across the board after New York stocks enjoyed handsome gains overnight on the heels of a rise in crude oil prices and better-than-expected U.S. industrial production data for January.

Excessive worries about oil oversupply receded after news on Wednesday that Iran has expressed support for a deal among four countries, including Saudi Arabia, to freeze oil output increase, brokers said.

The Nikkei accelerated its upswing to nearly 500 points in the morning, but its topside was limited due to a halt in the yen’s weakening.

Stock prices held firm in the afternoon, underpinned by solid performances of other Asian equities, including Shanghai stocks, and briefly extended gains to over 500 points. But the indexes trimmed gains in late trading, dragged down by selling on a rally, brokers said.

“It was a big relief for the market that Iran, which was believed to be cautious about limiting oil output, supported the deal among the four countries,” said Yoshihiko Tabei, chief analyst at Naito Securities Co.

Expectations grew that Iran’s stance would help recovery in crude oil prices and eventually contain profit-taking on stocks by funds in oil-producing countries, an official at a major securities firm said.

Investor sentiment also improved as China’s consumer price index for January, released Thursday morning, turned out to be almost in line with market estimates and did not trigger selling in the Chinese stock or foreign exchange market, brokers said.

Still, “the market had no energy to drive up the Nikkei far above 16,300,” Masayuki Otani, chief market analyst at Securities Japan Inc., said of the intraday high on Thursday. “Fresh incentives, such as policy remarks by key officials, would be favored.”

Rising issues far outnumbered falling ones 1,725 to 171 in the TSE’s first section, while 42 issues were unchanged.

Volume decreased to 2,628 million shares from Wednesday’s 2,840 million shares.

Financial issues attracted continued buybacks. Among them were banking groups Mitsubishi UFJ and Sumitomo Mitsui, as well as brokerage firm Nomura and insurer Tokio Marine.

Nintendo jumped 5.96 percent on growing hopes for its first smartphone game title after the company started accepting pre-registrations on Wednesday for the distribution of the new product to be released in March, brokers said.

On the other hand, SoftBank Group fell sharply due to selling to cash in gains after the recent surge. Rivals KDDI and NTT Docomo also lost ground.

Also on the minus side were JAL, tire maker Bridgestone and general contractor Taisei.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average surged 500 points to close at 16,240.