Nikkei posts highest close in 2 weeks, Matsushita up

Tokyo, July 27: The Nikkei average rose 1.99 percent to mark its highest close in two weeks on Thursday as investors bought Matsushita Electric Industrial Co. Ltd. and other stocks with strong earnings results.

Fujitsu Ltd. extended its gains in the last trading hour as the company raised its profit forecast for the fiscal first half, while Seiko Epson Corp. surged as it returned to a profit in the latest quarter.

''The market looks attractive at the moment,'' said Michael Coates, director of equity sales at KBC Financial Products. ''I do think that a lot of companies came out with lowball figures for the first half and full year and they are easily achievable.'' The Nikkei gained 295.71 points to 15,179.78, its highest finish since July 12. The TOPIX index rose 1.41 percent to 1,541.81.

Solid earnings should support the market, but Kazuyuki Naito, general manager at equities sales division at Mitsubishi UFJ Securities, warned the market is not ready for a real recovery just yet.

''We have to see how the U.S. Federal Reserve meeting will pan out in August and also have to check Japanese companies' half-year earnings numbers. Until then, investors won't be actively buying stocks,'' he said.

Goldman Sachs strategist Kathy Matsui said investors will return to the market with such catalysts as upward revisions to Japanese earnings forecasts in the fall and the confirmation that the Japanese economy can withstand slower global growth.

''Foreign investors are taking a rest right now from Japanese stocks, but with some catalysts they will again become net buyers,'' she said at Goldman's investment strategy seminar on Wednesday.

TECHNOLOGY STOCKS SHINE Matsushita, the maker of Panasonic goods, rose 2.4 percent to 2,370 yen and chip-testing equipment maker Advantest Corp. added 3.1 percent to 11,250 yen on solid earnings.

Seiko Epson, the world's second-largest ink jet printer maker, jumped 7.3 percent to 3,090 yen a day after it said it swung to a profit in the latest quarter as it phased out low-end products.

In the auto sector, Denso Corp surged 5.9 percent to 3,790 yen after it posted strong quarterly earnings and maintained its full-year forecasts.

Sony Corp rose 2.2 percent to 5,020 yen while Nikon Corp.

advanced 4.1 percent to 1,923 yen as expectations for solid earnings grew.

''Although the Japanese team lost, electronics makers benefited from the World Cup soccer games in the latest quarter,'' said Tsuyoshi Nomaguchi, strategist at Daiwa Securities Co Ltd's Japanese equity research.

After the market closed Sony said it swung to a quarterly operating profit, aided partly by robust sales of flat TVs.

Likewise, Nikon said after the market closed that its profit rose 73.6 percent in the latest quarter and stuck to its full-year forecast for a 10 percent rise.

Canon, however, ended down 0.6 percent to 5,390 yen, which Nomaguchi of Daiwa Securities said was due to profit-taking by investors who instead bought Canon's rival Seiko Epson.

Canon may draw buyers, however, on Friday as it posted a 32.6 percent jump in quarterly profit after trading hours and raised its full-year forecast.

Trade edged higher, with 1.66 billion shares changing hands on the market's first section, the highest total since July 20. Gainers outnumbered decliners by a ratio of three to one.

Reuters