Tokyo's Nikkei average closed at a 33-month high on Monday as hopes of strong earnings lifted several blue chip stocks such as Toshiba Corp
Analysts said the market is set for a firmer start on Tuesday after Advantest Corp, Japan's top maker of microchip testing equipment, said after the closing bell that it returned to the black in the past business year and forecast higher profits in the current term.
The market is also likely to get a lift after Nissan Motor Co reported a 12 percent jump in annual operating profit and forecast stable growth over the next four years.
"Buyers will likely chase companies like Advantest after its upbeat results and outlook...and that is also likely to spur buying of other tech stocks," said Yoshihiko Kosuga, an equities deputy general manager at Mizuho Investors Securities.
"The Nikkei could rise as high as 12,300 this week if a slew of bright earnings and outlooks start attracting individual investors, who are still reluctant to buy heavily weighted techs."
The benchmark Nikkei advanced for a third straight session, adding 0.36 percent to 12,163.89, its highest close since August 7, 2001, when it ended at 12,319.46.
The broader TOPIX index rose 0.11 percent to close at 1,210.96.
Although earnings optimism helped the indices end higher, the market lacked the impetus to rise further as some investors were reluctant to build positions before seeing actual earnings results and the business outlook from key companies. Investors were also hesitant to trade ahead of the "Golden Week" holidays in Japan. The market will be closed on Thursday and for the first three days of next week.
Trade volume on the first section declined to 1.525 billion shares, the lowest since April 12 and down from Friday's 1.742 billion. Decliners outnumbered advancers 833 to 621.
Marking the start of the earnings season for Japan's auto industry, Nissan reported a record operating profit of 824.86 billion yen ($7.56 billion) for the year ended on March 31, and forecast a 4.3 percent rise in operating profit this year.
Nissan's shares jumped 1.43 percent to 1,278 yen ahead of the announcement.
In the technology sector, Advantest, one of Japan's most actively traded high-tech stocks, posted a consolidated net profit of 17.3 billion yen ($158.6 million) for the past business year, in line with the market's forecast and following a net loss of 13 billion yen the previous year.
For the current business year to March 2005, Advantest expects a group net profit of 36 billion yen.
Advantest's shares closed up 0.22 percent at 9,210 yen prior to the announcement.
Analysts said the news from both Advantest and Nissan was positive because it suggested further growth in their business.
"The market has already factored in good numbers from fiscal 2003/04. What we want to see is what the companies say about their business outlook, especially the April-June quarter," said Fujio Ando, a market analyst at Chibagin Asset Management.
Companies set to unveil 2003/04 results on Tuesday include Toshiba, Fujitsu Ltd, Sony Corp and Kyocera Corp
Toshiba rose 1.26 percent to 563 yen after a bullish forecast by the Nihon Keizai newspaper on the electronics maker's earnings for both the 2003/04 and 2004/05 business years.
Fujitsu, Japan's largest computer maker, which last week raised its profit forecast for the year that ended on March 31, closed up 3.08 percent at 737 yen, adding to Friday's nine percent rally.
Consumer electronics giant Sony picked up 0.21 percent to 4,670 yen but Kyocera, the world's largest maker of ceramic casings for semiconductors, shed 0.62 percent to 9,550 yen.
Mitsubishi Motors Corp extended losses after main shareholder DaimlerChrysler AG said late last week it was ending financial support for the troubled auto maker.
Mitsubishi Motors, Japan's fourth-largest auto maker, fell 3.32 percent to 233 yen, nearly 27 percent below its level before DaimlerChrysler's announcement.
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