The Nikkei average booked its highest close in nearly five months on Thursday, climbing 2.28 percent as investors snapped up shares of Canon Inc and other leading Japanese firms after the Dow Jones industrial average booked its second straight record-high close.
But shares of Toshiba Corp dropped more than 5 percent as investors worried about memory-chip price falls and the company's larger-than-expected investment in US firm Westinghouse. Record closes on the Dow helped send investors to the stocks on the TOPIX's Core 30 Like the Dow, the Core 30 tracks 30 of the market's biggest and best-known companies.
"Investors are buying large caps such as the stocks on the Core 30, which is a lot like the Dow. It's stocks like Canon and Toyota at the moment - blue chips with strong earnings," said Ken Masuda, a senior dealer in equities at Shinko Securities. The Nikkei finished up 366.78 points at 16,449.33, its highest close since May 12.
The broad TOPIX index rose 1.95 percent to 1,633.20. Canon rose 4.8 percent to 6,550 yen, becoming one of the biggest contributors to the Nikkei's advance. Shares of the office equipment giant were also aided by news it may lift its projection for global digital camera shipments.
Toyota Motor Corp added 2.9 percent to 6,760 yen. Shares of Astellas Pharma Inc jumped 6.8 percent to 5,010 yen. Japan's third-largest drug maker on Wednesday announced a share buyback this business year worth up to $1.3 billion and deeper-than-expected job cuts.
Toshiba slid 5.2 percent to 723 yen. The electronics conglomerate said on Thursday that sharp price falls for NAND flash memory could make it difficult to meet its semiconductor sales target. Investor sentiment had been soured after Toshiba said a day earlier it would pay $4.16 billion for a 77 percent stake in Westinghouse, the US power plant unit of British Nuclear Fuels.
The price, which was triple initial expectations, prompted brokerage Goldman Sachs to lower its rating on the company to "neutral" from "buy". The Nikkei's poor performance compared with the Dow this year is evidence that Japanese share prices have lagged too far behind their US counterparts, said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.
The Nikkei has risen just 2.4 percent so far this year, compared with a 9.4 percent gain in the Dow. Elsewhere, shares of Daihatsu Motor Co Ltd jumped 3.4 percent to 1,099 yen. An executive at the minivehicle and small car maker told Reuters it plans to double output capacity at its Indonesia plant to 270,000 units by 2010.
Fellow auto maker Nissan Motor Co Ltd rose 3.5 percent to 1,369 yen. A Nissan spokeswoman told Reuters the company is still interested in finding a North American partner after a snub by General Motors Corp shares of Sony Corp fell for a sixth straight session, as investors remain worried about the impact of a massive battery recall and the outlook for its upcoming game console.
The electronics and entertainment firm finished down 0.2 percent at 4,440 yen after earlier hitting a low for the year. Oil developer INPEX Holdings Inc ended down 0.11 percent at 872,000 yen. Trade volume edged down from the previous session's four-week high, with 1.88 billion shares changing hands on the Tokyo exchange's first section. Advancing shares outnumbered decliners by 1,409 to 217.
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