Nikkei ends above 15,000 as tech stocks rally

Tokyo, Jun 22: The Nikkei average rose 3.36 percent to end above 15,000 for the first time in two weeks on Thursday, after a rally on Wall Street the previous day sparked buying of technology shares such as Canon Inc.

Chiyoda Corp., a plant engineering firm, and construction machinery maker Komatsu Ltd. gained after a Credit Suisse report on Wednesday had highlighted the firms as likely to benefit from strong Russian economic growth.

Mitsubishi Estate Co. Ltd., Mitsui Fudosan Co. and other property stocks rose after data showed office rents in Tokyo and Osaka are expected to rise this year for the first time in 15 years.

''Rises on Wall Street encouraged investors to pick up Japanese stocks and made them think that all the bad news may have been out'' for now, said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities Co. Ltd.

He was referring to pressure on share prices due to uncertainties about the U.S. economy, a key market for Japanese products.

Yamagishi said gains in other Asian markets such as India also lent support to the Japanese stock market.

The Nikkei gained 491.43 points to 15,135.69, finishing above the psychologically key 15,000 level for the first time since June 7.

The benchmark posted its biggest one-day percentage gain since Jan 27.

The TOPIX index rose 2.90 percent to 1,549.12.

Other analysts see Japan's stock market picking up further, helped by upward revisions in companies' earnings forecasts and a belief that stock prices have fallen too far.

Morgan Stanley equity strategist Naoki Kamiyama sees the TOPIX index rising as much as 16 percent before the end of this year.

Firms that make the bulk of their profits in the domestic economy, such as Mizuho Financial Group Inc., are a good bet, as are Showa Denko KK and others whose upward forecast revisions are likely to outstrip expectations, he said.

''Even considering the conservative earnings outlooks at the moment, the PER is certainly low enough,'' Kamiya said. Tokyo stocks trade now at an average price-to-earnings ratio (PER) of around 18 times.

RATE RISE FACTOR

Others said that with the Bank of Japan likely to end its zero interest rate policy sometime in the coming three months, the market may have factored in credit tightening in Japan as well as in the United States.

''It's fair to say that investors have rebuilt their positions during the latest market declines by taking a possible rate hike in Japan into account. So it's unlikely that the market will fall on this factor,'' said Hideyuki Suzuki, investment information manager at SBI Securities.

Caution still remained, however, Fujio Ando, senior managing director at Chibagin Asset Management, said the U.S. Federal Reserve is likely to raise interest rates at its August policy setting meeting, and Japanese shares are likely to be volatile until then.

''Concerns about the U.S. economy have not completely been wiped out,'' Ando said. He expects the Nikkei to struggle to reach 16,000.

Technology stocks led Thursday's rise, with digital camera maker Canon adding 3.6 percent to 8,000 yen. Sony Corp. rose 3.6 percent to 4,940 yen and Advantest Corp., a maker of microchip testers, advanced 4.3 percent to 10,920 yen.

Sanyo Electric Co. Ltd. rose 4.6 percent to 251 yen after the consumer electronics firm said it would invest more than 0 million in its solar cell business over five years.

Komatsu Ltd. jumped 7.6 percent to 2,145 yen to be the best performer on the Nikkei 225 after Credit Suisse said the firm would be a beneficiary of robust Russian economic growth. Chiyoda rose 5.9 percent to 2,145 yen.

In the property sector, Mitsubishi Estate added 3.9 percent to 2,250 yen and Mitsui Fudosan rose 2.5 percent to 2,285 yen.

Ikoma Data Service System, a private property research firm, said on Wednesday that office rents will likely pick up in Osaka and Tokyo this year for the first time since 1991, a peak of Japan's asset inflation bubble.

Sumitomo Metal Mining Co. Ltd., Japan's top gold producer, jumped 6.3 percent to 1,352 yen after gold rose above 0 an ounce on Thursday, its highest level in more than a week.

Mitsubishi Materials Corp., a top nonferrous metal smelter, jumped 5.9 percent to 464 yen.

Trading volume edged up to 1.706 billion shares, but was still lower than last week's daily average of 1.99 billion. Gainers overwhelmed decliners by a ratio of 26 to 1.

REUTERS