Nikkei ends higher aided by GDP, shippers advance

Tokyo, May 19 : The Nikkei rose 0.42 percent on Friday as investors, encouraged by stronger-than-expected gross domestic product (GDP) data, picked up Canon Inc. and other stocks that had recently declined.

Shipping firms advanced after UBS raised its ratings and target prices, while Kajima Corp. and other firms whose earnings disappointed investors lost ground.

''Following extended losses on Wall Street investors held back initially, but GDP came in better than expected and they began buying stocks on dips,'' said Kazuhiro Takahashi, general manager at equity planning and administration department, Daiwa Securities SMBC Co. Ltd.

Analysts said gains in U.S. equities index futures on the Globex electronics platform also encouraged investors.

The Nikkei average gained 68.27 points to 16,155.45. But the Nikkei booked its second straight weekly loss, falling 2.69 percent from last Friday.

The TOPIX index edged down 0.40 percent to 1,638.57.

Cabinet Office data showed on Friday that Japan's GDP expanded 0.5 percent in real, price adjusted terms in the January-March quarter from the previous quarter, aided by resilient capital spending and consumption.

Shipping firms advanced following upgrades by UBS.

Industry leader Nippon Yusen KK rose 4.7 percent to 730 yen after UBS raised its target price to 900 yen from 750 yen.

Second-ranked Mitsui O.S.K. Lines Ltd. rose 3.3 percent to 806 yen after its target price was lifted by 100 yen to 1,000 yen.

UBS upgraded both stocks to ''buy 2'' from ''neutral 2''.

Some banks also rebounded, with leading banking group Mitsubishi UFJ Financial Group Inc. up 0.6 percent at 1.67 million yen.

Takahashi of Daiwa Securities said bank shares will be closely watched as the companies are scheduled to announce earnings results next week.

Losers included builder Kajima which dropped 2.2 percent to 592 yen, extending losses to an eighth session after its profit forecast for the year to March 2007 fell short of expectations.

UNDECIDED

While some said the market may be ready to turn around after recent slides, Tomomi Yamashita, senior fund manager at Shinkin Asset Management Co. Ltd., said the market will likely stay subdued until late July or early August when first quarter earnings are due.

''No one would make a bet at this point because investors are not sure whether corporations can afford to revise up their forecasts or will need to cut their outlooks,'' he said.

Yamashita said although dollar/yen moves and the declines in U.S. stocks are worrying factors, the main reason for the recent falls in the Japanese stock market was corporate earning outlooks which failed to meet investor expectations.

''Expectations were high and those hopes were dashed,'' he said.

''Now we are in for a reality check.'' On the technology sector, chip equipment maker Tokyo Electron Ltd rose 1.4 percent to 8,730 yen after U.S. trade group data showed on Thursday that the book-to-bill ratio of North American semiconductor chip equipment orders for April was the highest level in two years.

Advantest Corp gained 1 percent to 11,990 yen.

Trade volume was the lowest in four sessions, with 1.91 billion shares changing hands on the Toyko exchange's first section.

Advancers beat decliners by a ratio of nearly 2 to 1.

Reuters