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Tokyo stocks jump on Wall Street rally, yen’s drop


Stocks surged on the Tokyo Stock Exchange Wednesday, backed by a strong rally on Wall Street overnight and the yen’s drop against the dollar.

The 225-issue Nikkei average climbed 661.04 points, or 4.11 percent, to close at 16,746.55. On Tuesday, the key market gauge gained 58.75 points.

The Topix index of all first-section issues ended up 48.78 points, or 3.75 percent, at 1,349.61, after rising 2.98 points the previous day.

Tokyo stocks attracted hefty buying from the outset after the Dow Jones industrial average sharply rebounded on the New York Stock Exchange Tuesday.

Worries about the U.S. economy receded following the U.S. Institute for Supply Management’s announcement that its manufacturing index for February rose to 49.5, beating the market’s consensus estimate of 48.5, brokers said.

The yen’s weakening against the dollar also helped brighten investor sentiment, they noted.

Stocks accelerated their upswing in the afternoon, briefly pushing up the Nikkei average by more than 700 points.

Although its reading was stronger than expected, the ISM index failed to top the boom-or-bust dividing line of 50. This mediocre result was “perfect” for easing concerns over both U.S. economic conditions and a fresh interest rate hike by the Federal Reserve at an early date, a major securities firm official said.

Another brokerage firm official said that a pause in falling crude oil prices helped turn investors less risk-averse.

“The day’s rally highlighted Japanese stocks’ heavy dependence on developments in overseas markets,” particularly Wall Street, said Kenichi Hirano, market analyst at K Asset Co.

He also pointed out that the rebound was caused chiefly by buybacks of oversold issues. “Players have yet to become confident” of sustained market recovery, Hirano said.

Rising issues overwhelmed falling ones 1,824 to 82 in the TSE’s first section, while 36 issues were unchanged.

Volume increased to 2.49 billion shares from Tuesday’s 2.22 billion shares.

The weaker yen buoyed export-oriented names, including automakers Toyota, Nissan and Honda, electronics parts makers Alps, Murata Manufacturing and TDK, air conditioner producer Daikin, and tire manufacturer Bridgestone.

Machinery makers, such as industrial robot leader Fanuc, drew purchases thanks to receded worries about a slowdown in the U.S. manufacturing sector.

Olympus jumped 7.46 percent after the optical equipment maker said it has made deals with the U.S. Justice Department to settle kickback allegations without revising down its earnings estimates for the current fiscal year through March.

Bearing maker Minebea shot up 7.25 percent, following its announcement Tuesday of a plan to launch sales of lighting equipment in Southeast Asia.

By contrast, general contractor Kumagai Gumi, Japan Communications and toy maker Tomy lost ground.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average ended up 640 points at 16,740.