Tokyo shares finish 0.23pc after forex intervention

TOKYO: Tokyo share prices closed 0.23 percent higher Thursday on Japanese authorities' intervention to weaken the yen although they gave up early gains in late trading.

The benchmark Nikkei-225 index of the Tokyo Stock Exchange rose 22.04 points to 9,659.18. But the Topix index of all first-section issues fell 0.05 percent or 0.39 points to 826.36.

The market opened higher following an upturn on Wall Street overnight and reported merger talks between Japanese manufacturing giants Hitachi and Mitsubishi Heavy Industries.

Share prices got a further boost midmorning as the Japanese government intervened in currency markets in a bid to counter speculator-driven rises of the yen that had pushed the unit near its post-war high against the dollar.

The Nikkei index rose more than 1.3 percent at one point but quickly lost steam amid scepticism over the long-term impact of the Japanese action.

"The market is breathing a sigh of relief for now," Takuya Yamada, senior portfolio manager of ITC Investment Partners, said after Tokyo announced the intervention.

But Yamada added the yen remained relatively firm despite the action.

Naoki Fujiwara, fund manager at Shinkin Asset Management, noted: "Unlike the post-(March 11) quake intervention, the one today wasn't globally coordinated and the dollar remains anaemic due to economic concerns."

"So the effect was inevitably limited," he said.

Fujiwara said the timing of the yen action was pre-emptive, arguing the current level would serve as a technical support if Friday's US jobs data disappoints.

Investors were unfazed after the Bank of Japan said in the afternoon it would expand by 10 trillion yen a scheme to buy assets and boost liquidity to ensure the nation's post-quake recovery from the impact of a strong yen.

The dollar was at 79.35 yen in Tokyo afternoon trade, up from 76.99 earlier. The Japanese unit also fell against the euro, with the single currency fetching 113.45 from an earlier 110.45.

Major exporters rose, with Toyota Motor up 0.64 percent at 3,140 yen and Sony up 0.10 percent at 1,925.

Shares in Mitsubishi Heavy jumped 3.43 percent to 361 yen and Hitachi rose 1.72 percent to 471 yen following reports that they have agreed to start merger talks, aiming to create a new entity in early 2013.

The two companies have combined annual sales of more than 12 trillion yen ($155 billion) and the move would create a Japanese industrial behemoth second only to Toyota Motor in revenue terms.

Media reports earlier said the two would announce the agreement Thursday but they were now reportedly holding it off.

Copyright AFP (Agence France-Presse), 2011