Japan's Nikkei rose 0.4 percent on Friday, drawing support from an apparent halt in the yen's advance against the dollar after Japanese officials stepped up their campaign against the yen's rise with a series of comments. But the benchmark lacked clear direction, moving in and out of negative territory, as investors remained doubtful that dollar/yen moves will stabilise anytime soon.
They also grew cautious after weak jobs data underscored persistent worries about the sluggish pace of the US economic recovery. On the week, the Nikkei shed 4 percent, its worst weekly decline in about a month, with shares of exporters hit hard by worries about the impact of the strong yen and a weakening outlook for global demand on their earnings.
"The market is still clearly on a downtrend. The yen's advance, which has been the main cause of recent market slides, is coming to a halt and that's why investors have stopped selling for now," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
The yen rose to a 15-year high against the dollar of 84.72 yen this week on trading platform EBS, and market players say intervention at some point cannot be ruled out. But on Friday the yen was weaker at 86.06 yen, helped by a report Japan's prime minister and the head of its central bank would meet to discuss ways to deal with the Japanese currency's strength.
The Nikkei ended up 40.87 points at 9,253.46. It touched a 13-month low on Thursday before paring losses. The index is down 3 percent so far this month and has lost about 12 percent in the year to date. The broader Topix rose 0.4 percent to 831.24.
If the dollar falls back below 85 yen, market players say the Nikkei could break below 9,000, although they add there are support levels at 9,091, a low hit last month, and 9,076, a trough marked in November 2009. A fall below the Nikkei's support in the 8,600-8,800 range could open the way for a slide to 8,000 or 7,000, seriously alarming Japanese authorities, foreign exchange traders in Tokyo said.
If that happens, authorities are likely to take firm action. It could be buying of more government bonds by the Bank of Japan, tweaking of the BOJ's special operations or Japan's intervening in the FX market, some said. Some exporters recouped ground after sharp falls, with Sony Corp gaining 1.9 percent to 2,613 yen.
Panasonic Corp climbed 2 percent to 1,086 yen after Goldman Sachs raised its rating on the stock to "buy" from "neutral", citing a good medium-term buying opportunity. Some 1.60 billion shares changed hands on the Tokyo exchange's first section, after it hit the lowest volume since late December on Monday at 1.25 billion. Advancing shares outnumbered declining ones by 2 to 1.
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