Nikkei briefly tops 16,000, but Sony fall weighs

Tokyo, Aug 16: The Nikkei share average rose above 16,000 for the first time in 2 months on Wednesday, as shares of Canon Inc. and other exporters gained after weaker-than-expected U.S. price data eased concerns about higher rates in Japan's key export market.

But shares of Sony Corp. fell after Dell Inc. recalled more than 4 million laptop computer batteries made by Sony saying they could overheat and catch fire.

The U.S. producer price index, which measures wholesale prices, rose just 0.1 percent in July, relieving worries that inflationary signals would prompt the U.S. Federal Reserve to raise interest rates.

''With the PPI so below expectations, it seems to have eased concerns ... it doesn't seem to be that necessary to worry about inflation now,'' said Katsuhiko Kodama, a senior strategist at Toyo Securities Co. Ltd. But the index's gains were somewhat muted given the advances in the U.S. overnight, he said.

''The Tokyo market is finding it harder to advance than I expected. I thought it would post bigger gains .... Sony seems to be a drag,'' Kodama said.

The Nikkei finished the morning up 1.14 percent at 15,997.03, having earlier topped 16,000 for the first time since May 29.

The broader TOPIX index rose 1.13 percent to 1,623.25.

Shares of office-equipment giant Canon and other exporters gained. Higher U.S. rates are a minus for Japan's exporters because they eat into consumer spending.

Canon rose 2.2 percent to 5,660 yen.

Toyota Motor Corp. advanced 1.8 percent to 6,380 yen.

Advantest Corp. added 1.9 percent to 11,210 yen, becoming the biggest contributor to the Nikkei's advance.

SONY FALLS

But shares of Sony were down 1.2 percent at 5,150 yen, putting the biggest drag on the Nikkei, on concerns about the impact of Dell's laptop computer recall.

U.S. consumer safety officials said on Tuesday they are reviewing all Sony-made lithium-ion batteries in laptop computers for fire hazards.

Brokerage Morgan Stanley estimated that the recall cost, if Sony pays all the expenses, could reach 30-50 billion yen (9-431 million).

Japanese small-cap stocks also posted advances, with the Mothers index adding 3.41 percent to 1,354.71, and the Tokyo exchange's second section added 1.19 percent to 4,281.97.

With the worst of the small-cap sell-off now apparently over, more retail investors have returned to the market, said Yoku Ihara, a manager in the investment information department of Retela Crea Securities.

''The small-cap markets have really improved as individual investors have returned,'' he said.

Shares of electronics conglomerate Hitachi Ltd. gained 4.09 percent to 738 yen after the Nihon Keizai business daily named the stock as the most undervalued in the electronics sector.

Hitachi's market value was just under 2.4 trillion yen but the value of its holdings in units and affiliates plus its cash and cash equivalents exceeds 2 trillion yen, the paper said.

Trade volume rose, with 843 million shares changing hands, up from 761 million shares on Tuesday morning. Advancers outnumbered decliners by a ratio of five to one.

REUTERS