Nikkei up 0.4 pc as Nippon Steel, exporters gain

Tokyo, July 20: Japan's Nikkei average added 0.35 per cent on Friday with Nippon Steel Corp. and other steel shares advancing on solid earnings expectations, while investors picked up exporters after a rally on Wall Street.

Meanwhile, consumer lenders tumbled following sharp gains from the previous day when news of merger talk between Promise Co. and Sanyo Shinpan raised expectations for a shake-up in the sector.

Zenshiro Mizuno, senior managing director at Marusan Securities, said the market is moving in a favourable direction as investors shift money into steel stocks such as Nippon Steel Corp., a trend that could prompt broader buying.

''When steel stocks move, investor sentiment, especially among retail investors, improves,'' he said, adding steel shares had been lagging behind so far.

Mizuno said steel stocks are among the main beneficiaries of current global growth led by the emerging economies of Brazil, Russia, India and China.

''Topping the highest close for the year might be a matter of time, helped by a bullish mood in New York stocks.'' The benchmark Nikkei average finished the morning up 63.68 points at 18,180.25. It logged the highest finish for the year at 18,300.39 on Feb. 26.

The broader TOPIX index rose 0.50 per cent to 1,776.92.

Trade volume grew with 1.3 billion shares changing hands, compared with last week's morning average of 980 million shares.

Advancing shares outpaced decliners by 842 to 709.

Steel Stocks Shine

Shares of Nippon Steel climbed 2.9 per cent to 946 yen, making it the most actively traded share on the main board, after data showed on Thursday Japan's crude steel output in January-June hit a record high for the first time in 33 years on strong demand from Japanese car and other manufacturers.

China's strong economic growth and robust domestic demand for steel also eased concerns of a possible supply glut in Asia and raised expectations of solid earnings growth for Japanese steelmakers for the first quarter.

JFE Holdings Inc. gained 3.6 per cent to 8,570 yen, Kobe Steel Ltd rose 3.1 per cent to 492 yen and Sumitomo Metal Industries Ltd. added 1.2 per cent to 764 yen.

The steel subindex has risen about 36 per cent in the year to date.

Some exporters rose, with Canon Inc. up 1.8 per cent at 7,200 yen while Honda Motor Co. Ltd. rose 1.8 per cent to 4,550 yen.

Shares of Aiful Corp tumbled 6.9 per cent to 3,240 yen, after surging 11 per cent on the previous day, while Acom Co. Ltd.

declined 5.7 per cent to 4,290 yen, erasing part of its 11.5 per cent rise on Thursday.

Promise dropped 7.1 per cent to 3,520 yen. On Thursday, the stock last traded up 5.9 per cent at 3,790 yen.

Elsewhere, Mitsubishi Heavy Industries Ltd. jumped 4.7 per cent to 832 yen after UBS said in a report on Thursday it had initiated coverage of the stock with a ''buy 2'' rating and a target price of 1,000 yen.

KDDI Corp. slid 3.6 per cent to 875,000 yen and Softbank Corp.

retreated 1.3 per cent to 2,705 yen on fears that an escalating price war will hurt the industry.

Reuters>