Nikkei books highest close since May 2000 on GDP

Tokyo, Feb 15: The Nikkei average booked its highest close in nearly seven years on Thursday as retailers such as Seven&I Holdings Co. Ltd. gained after unexpectedly strong gross domestic product data increased confidence in the world's second-largest economy.

But real estate firms such as Mitsui Fudosan Co. Ltd. declined due to concerns about higher interest rates, while property investment companies tumbled after Japan's securities watchdog called for administrative penalties against one such firm.

Consumer lender Orient Corp. plunged nearly 20 percent after it said it would post a heavy loss this year due to tighter lending laws.

GDP data showed that Japan's economy expanded in the October-December quarter at an annualised pace of 4.8 percent, beating market expectations for growth of 3.8 percent.

''It goes without saying the GDP data is the main factor in the stock market right now,'' said Masayoshi Okamoto, head of dealing at Jujiya Securities.

''Department stores are strong across the board because of the GDP data, which showed that private-sector consumption is expanding.'' The Nikkei climbed 0.81 percent to end at 17,897.23, its highest finished since May 8, 2000, and just 0.6 percent below the psychologically important 18,000 mark.

The broader TOPIX index rose 0.65 percent to 1,776.71, its highest close since April 2006.

Department stores and other retailers made strong gains.

Private-sector consumption, which accounts for some 55 percent of GDP, grew 1.1 percent, above a median market forecast for a 0.8 percent rise.

Seven&I Holdings, Japan's largest retail group, advanced 4.8 percent to 3,750.

Department store operator Takashimaya Co. Ltd. jumped 10 percent to 1,690 yen, while rival Marui Co. Ltd. climbed 7.3 percent to 1,533 yen.

PROPERTY LOWER

Rate-sensitive companies such as real estate firms declined on concern the strong GDP data could prompt Japan's central bank to raise interest rates next week.

Mitsui Fudosan, Japan's largest property company, declined 0.6 percent to 3,380 yen.

Real estate investment trusts, or REITs, lost ground after Japan's securities watchdog recommended administrative penalties for DaVinci Select, which manages assets for REIT fund DA Office Investment Corp.

The Securities and Exchange Surveillance Commission said on Wednesday that DaVinci Select did not provide proper documents when purchasing properties and as a result, acquired real estate that was improperly appraised.

Shares of DA Office finished down 11.1 percent at 800,000 yen, after spending the entire day flooded with sell orders.

But simple profit-taking was also a likely culprit behind the fall in property stocks, said Marc Desmidt, head of the large-cap equity team at BlackRock Japan.

''Whether interest rates are the excuse or Davinci is the excuse is neither here nor there,'' Desmidt said.

''The fact is, (property stocks) have gone up a long way in a short time. Why wouldn't people want to bank some of those gains?'' The TOPIX's real estate sub-index has risen nearly 23 percent since the start of the year, compared with a 5.7 percent increase in the TOPIX itself.

Shares of Orient tumbled 19.4 percent to 191 yen, after it said it would revise its earnings forecast for the full year.

The company said in a statement it was still evaluating how much red ink it would spill in the business year ending March 31.

''We foresee we will not be able to escape heavy losses,'' it said.

It said it would not now pay a dividend of 3 yen per share it had previously forecast for this year.

Concerns about losses at Orient hit shares of trading firm Itochu Corp., which has a 21 percent stake in the consumer lender. Itochu lost 3.5 percent to 1,121 yen.

Trade was active, with 2.4 billion shares changing hands on the Tokyo exchange's first section, compared with last year's daily average of 1.9 billion shares.

Advancers outnumbered decliners by a ratio of more than two to one.

REUTERS