Nikkei snaps six-day fall on bargain-hunting

TOKYO, May 17: The Nikkei average gained 0.92 percent on Wednesday, snapping a six-day losing streak as waning concern about a strong yen encouraged investors to buy recently battered issues such as Tokyo Electron Ltd.

Bargain-hunting also helped shares of other exporters with strong earnings prospects, such as Toyota Motor Corp. and Nikon Corp.

''A rapid fall in the dollar recently has been the main drag on the Tokyo market,'' said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

''But the market seems less worried than before as the speed, not the level, is a problem and the speed is being somewhat curbed,'' he said, adding that the current level around 110 yen to the dollar is in line with what major manufacturers forecast on average for the dollar/yen rate this business year.

A higher yen eats into profits exporters earn overseas when repatriated home.

The Nikkei rose 149.25 points to 16,307.67 after falling more than 1,100 points during the previous six sessions.

The TOPIX index gained 0.74 percent to 1,657.07.

The Nikkei had posted its longest losing streak since October on a combination of factors including a strong yen, concerns about accounting practices and disappointing profit forecasts from a number of top companies.

The yen again tested an eight-month high versus the dollar on Wednesday. It traded around 109.50 yen by late Tokyo trade, not far from a high of 109.31 hit at the end of last week.

A recovery in gold and base metal prices helped Sumitomo Metal Mining Co. Ltd., Japan's biggest gold producer, among other esource-related stocks. Sumitomo Metal Mining gained 4.7 percent to 1,602 yen, after a 9.2 percent slide the previous day.

BARGAINS SOUGHT Daiwa Asset's Nagano said although concerns remain that the dollar could fall towards 105 yen, stability seems to be returning to the currency market as well as other Asian stock markets, improving investors' appetite for Japanese shares.

Tuesday's tame U.S. inflation data helped soothe worries about further U.S. interest rate increases and boosted major Asian markets.

Tokyo Electron, the world's second-biggest chip equipment maker, jumped 4 percent to 8,640 yen, reversing a 1.2 percent fall the previous day.

Precision equipment maker Nikon, whose business has improved on strong chip spending and after cost structuring reforms, jumped 6.3 percent to 2,290 yen, extending gains into a third session.

Toyota Motor, the world's most profitable auto maker, was up 1.1 percent at 6,240 yen, snapping a seven-day losing streak.

Honda Motor Co., Japan's No.3 auto maker, also snapped a seven-day fall, rising 0.8 percent to 7,750 yen.

Honda outlined an expansion plan on Wednesday that will see new car plants in the United States and Japan to power it to a fresh global sales forecast of at least 4.5 million cars in 2010.

But Aiful Corp. sank after it became the latest company to issue a forecast that missed market expectations.

Aiful, Japan's biggest consumer finance firm, lost 10.4 percent to 6,110 yen a day after it reported a drop in annual profit and forecast a further decline this year as a shutdown by regulators earlier this month drove away customers.

Nomura Holdings Inc., Japan's No.1 brokerage, could be a focus on Thursday. Nomura said after the market closed that it intends to pay a dividend in the current year which will be one-third less than in the year ended March 31, when it posted a record profit.

ACCOUNTING WOES Condominium developer Urban Corp. plunged 15.3 percent to 1,017 yen, adding to its steep loss the previous day following an announcement of a delay in its earnings statement.

Urban said its businesses have expanded and also become complicated, requiring more time to audit than initially expected.

There are concerns about a possible tightening of auditing rules on the use of special-purpose companies (SPCs), that could eventually lead to a decrease in real estate transactions.

Many developers use SPCs as a vehicle to develop and finance property, thus taking properties off their balance sheets along with debts that come with development costs.

Yoshihiro Hashimoto, a research analyst at Merrill Lynch, said in a report on Wednesday that a development-type SPC may be required to be shown on the balance sheet as well as interest-bearing debts that come with development costs.

Trade rose to its highest level in two months, with 2.30 billion shares changing hands on the first section. Advancers beat decliners 923 to 679.

REUTERS