Nikkei near 7yr high as Japan GDP beats forecasts

Tokyo, Feb 15: The Nikkei share average rose to its highest in nearly seven years on Thursday as investors bought retail shares such as Fast Retailing Co Ltd after data showed Japan's economy grew more than expected in the October-December quarter on an upturn in personal consumption.

But real estate stocks such as Mitsui Fudosan Co. Ltd. lost ground largely on concerns about the impact of possible higher interest rates on their earnings.

Hiroyuki Fukunaga, chief strategist of the research division at Rakuten Securities, said investors are locking in profits, following the Nikkei's continuing rally, on shares such as real estate firms that could get hurt by a rate hike.

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

''After GDP data came in stronger than expected, investors are watching for the possibility of an interest rate hike, and the buying and selling of stocks that will either benefit or sustain damage from it are moving the index,'' he said.

Higher rates are seen hurting stocks in general since they increase borrowing costs and can curb consumer spending.

The Nikkei was up 0.66 percent or 116.61 points at 17,869.25 as of 0126 GMT. The benchmark gained 0.74 percent on Wednesday to its highest close since May 2000.

The broader TOPIX index rose 0.49 percent to 1,774.04. The index ended up 0.54 percent at 1,765.31 in the previous session, its highest since April 2006.

Clothing retailer Fast Retailing was up 1.4 percent at 9,680 yen, and Seven&I Holdings Co. Ltd. added 3.9 percent to 3,720 yen.

Mitsui Fudosan, Japan's largest property firm, lost 1.8 percent to 3,340 yen.

Reuters