Japan's Nikkei share average rose 1.03 percent on Tuesday as investors, shifting their attention to the economy from politics, bought Nikon Corp and other companies with strong earnings results.
Better-than-expected machinery orders data for June reinforced the view that Japan's economy was on track for a solid recovery and boosted machinery makers such as Fanuc Ltd and other issues sensitive to domestic demand, such as real estate firms and retailers. "Machinery orders helped the market keep the momentum going," said Soichiro Monji, strategist at Daiwa SB Investments.
"The economic outlook held among institutional investors turned brighter and they are reshuffling their portfolios, reallocating their funds from bonds to stocks," he added. The Nikkei closed up 121.34 points at 11,900.32, extending a 12.50-point gain on Monday. The broader TOPIX index added 1.21 percent to 1,206.27.
Fanuc, a maker of industrial robots, rose 2.7 percent to 7,990 yen after data showed Japanese machinery orders jumped 11.1 percent in June and the government forecast they would continue rising in months ahead, offering hope the economy was set for stronger growth as exports recover.
Solid corporate earnings also lifted stocks such as Nikon, the world's No 2 maker of digital single lens reflex (SLR) cameras, which ended up 3.9 percent at 1,296 yen. The company said on Monday that its quarterly operating profit more than quadrupled and raised its full-year forecast by 9 percent.
Mitsubishi Materials Corp soared 6.8 percent to 298 yen, becoming the best performer among the Nikkei 225 components, as Japan's top non-ferrous metal smelter posted on Monday a 30.6 percent rise in quarterly net profit.
Energy stocks also shined as US crude oil futures scaled fresh highs above $64 on Tuesday because of fears of attacks in Saudi Arabia, the world's biggest oil producer.
In ACCESS electronic trade, crude was at $64.18 a barrel. Nippon Oil Corp added 2.1 percent to 812 yen and Inpex, an oil and natural gas development firm, jumped 5.2 percent to 789,000 yen.
Yusuke Sakai, a manager at Mizuho Securities, said political uncertainties after a snap election was called following the rejection of postal privatisation bills, a key part of Prime Minister Junichiro Koizumi's reform agenda, were a worry, but earnings and economic fundamentals would come into play for now.
"Investors have figured out that a number of companies have posted solid earnings and they are picking up stocks like Matsushita and Hoya," he said, referring to Matsushita Electric Industrial Co, which rose 2.7 percent to 1,872 yen and Hoya Corp, which gained 3.8 percent to 14,340 yen. Volume increased, with 1.65 billion shares changing hands, above last year's daily average of 1.45 billion shares. Advancers swept past decliners, 1,455 to 144.
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