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Nikkei rebounds with 245-point gain driven by buying on dips

JIJI

Stocks gained further ground Thursday, buoyed by a bout of purchases following the sharpest falls in recent memory.

The 225-issue Nikkei average gained 245.49 points, or 1.13 percent, to end at 21,890.86 on the Tokyo Stock Exchange. On Wednesday, the key market gauge rose 35.13 points.

The Topix index of all first-section issues closed up 15.78 points, or 0.90 percent, at 1,765.69, after climbing 6.50 points the previous day.

The market opened firmer thank to buying on dips following a plunge Tuesday in which the Nikkei average lost more than 1,000 points after the Dow Jones industrial average incurred its worst single-day point loss the previous day.

Investor fears of another tumble eased somewhat as volatility fell in the U.S. market on Wednesday, brokers said.

Later, the Tokyo market was weighed down by selling on a rally, intermittently pushing down the key market gauges to levels slightly above Wednesday’s close.

But stocks attracted purchases in the afternoon as the yen weakened against the dollar, with the Nikkei briefly extending its gains to some 330 points, brokers said.

The market “was on its way to regaining stability,” an official at a bank-affiliated securities firm said, adding that buying on dips by individual investors helped lift prices.

Investors took heat from higher U.S. stock index futures after hours, market sources said.

“The pressure of selling on a rally became heavy after the Nikkei approached 22,000,” Mitsuo Shimizu, equity strategist at Japan Asia Securities Co., said, noting that some investors sold stocks to adjust their positions.

Corporate earnings in Japan are brisk, Shimizu stressed, suggesting that stocks are likely to gain further ground on the back of strong economic fundamentals.

Winning issues outnumbered losers 1,485 to 509 in the TSE’s first section, while 71 issues were unchanged.

Volume dropped to 1,820 billion shares from Wednesday’s 2.336 billion shares.

Cosmetics maker Shiseido rose 3.97 percent after announcing on Wednesday an upward revision to its operating profit forecast for the year ended in December.

Also on the plus side were automaker Toyota and machine tool maker Fanuc.

By contrast, food maker Meiji Holdings met with selling as its April-December operating profit and operating profit forecast for the full year through March, both released on Wednesday, fell short of the market consensus, brokers said.

Other major losers included Hokuriku Electric Power and toymaker Tomy.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average closed up 330 points at 21,940.