By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks jumped in early
trading Friday to recover some of the steep losses suffered in the
previous session, with exporters aided as the U.S. dollar climbed
above Yen101 after a slew of monthly economic data.
The Nikkei Stock Average gained 1.9% to 13,847.64 a day after it
plunged by 5.2%, while the broader Topix rose 1%.
The gains were steady after the sharp volatility seen recently
amid concerns over an increase in Japanese government bond yields
and a firmer yen.
"We think the recent plunge in [the] Nikkei is the result of the
sharp appreciation in the yen and expect it to reverse," said ING
Financial Markets Research economist Sakpal Prakash.
He said the Bank of Japan 's accommodative policies are expected
to lift the dollar to Yen110 by the end of the year, and to Yen115
by the end of 2014.
At its current level, the Nikkei Average is off 0.2% so far in
May after rising for nine straight months.
Elsewhere in Asia, South Korea's Kospi rose 0.5% and Australia's
S&P/ASX 200 gained 0.1%.
Taiwan's Taiex advanced 0.7%, and the Shanghai Composite Index
inched up 0.1%, but Hong Kong's Hang Seng Index dropped 0.2%,
swinging off modest initial gains.
The broad advances came as stocks on Wall Street rose overnight
on signs of further improvement in the U.S. housing market, while
weaker-than-expected data on first-quarter economic growth and
jobless claims raised hopes the Federal Reserve may keep its
current level of bond purchases.
"Every U.S. data point about the pace of economic growth is
being closely examined by market followers after Federal Reserve
Chairman Ben Bernanke indicated that the central bank could pare
back its stimulus efforts should the U.S. economy continue to
improve," said Perpetual head of investment-market research Matthew
Sherwood.
"The Fed needs to improve its communication with the market
about what its intentions truly are, but the stimulus is only
likely to be reduced, not reversed," he said.
Stock movers
In Japan, the rebound followed data showing April core consumer
prices rose 0.3% from March, although they were 0.4% lower from the
year-ago month.
Japanese industrial production during the same month rose 1.7%
from a year earlier, but a survey indicated lingering pessimism,
with manufacturers tipping flat output for May and a 1.4% drop in
June.
Among the notable gainers in Tokyo, Sony Corp. (SNE) jumped 4%
after several reports said the company has tapped Morgan Stanley
and Citigroup to help sound out options for its entertainment
business. The reports came after billionaire hedge-fund manager
Daniel Loeb called on the electronics major to spin off its
entertainment business.
Several other exporters also advanced even as the U.S. dollar
(USDJPY) straddled the Yen101 level.
Shares of Fanuc Corp. (FANUY) rallied 4.4%, and Kyocera Corp.
(KYO) added 2.5%.
Fast Retailing Co. (FRCOY) gained 2.4% after plunging 11% in the
previous session.
Financial stocks also rebounded after recent losses, with
Sumitomo Mitsui Financial Group Inc. (SMFJY) rising 1.6%, and
Mitsubishi UFJ Financial Group Inc. (MTU) adding 0.8%.
In Sydney trade, a retreat in some banks countered gains in
mining stocks. Shares of Evolution Mining Ltd. (CAHPF) leaped 5.1%
and Newcrest Mining Ltd. (NCMGY) was ahead by 1.1% after an
overnight improvement in gold prices.
In the broader mining space, BHP Billiton Ltd. (BHP) rose 1.5%,
and Rio Tinto Ltd. (RIO) advanced 2.4%.
But heavyweight Commonwealth Bank of Australia (CBAUY) and
National Australia Bank Ltd. (NABZY) gave up early gains amid
further selling pressure on high dividend-paying stocks ahead of
the weekend. The stocks fell 0.5% and 1%, respectively.
Hong Kong stocks fluctuated between gains and losses in choppy
early trading, with heavyweight HSBC Holdings PLC (HBC) and some
property developers climbing on positive cues from the U.S.
But mainland Chinese banks and insurance companies fell on
caution ahead of the release of the monthly Purchasing Managers'
Index data. An official PMI gauge for May was due out Saturday,
while a final reading of a separately compiled PMI from HSBC and
Markit was scheduled for Monday.
HSBC rose 1.1%, China Resources Land Ltd. (CRBJF) gained 0.6%,
and casino operator Sands China Ltd. (SCHYY) advanced 2.2%.
But shares of China Construction Bank Corp. (CICHY) lost 1.1%,
and China Life Insurance Co. (LFC) declined 1%,weighing the broader
market.
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