Japan's Nikkei share average ended above 16,000 on Tuesday for the first time in more than a month as fund injections into Swiss bank UBS helped ease concern over the global financial crisis. Exporters like Sony Corp gained as the dollar firmed against the yen.
Yet investors still found reasons to hold off ahead of a slew of economic events, topped by a US Federal Reserve interest rate decision later in the day. "The market will definitely welcome a 50 basis point cut," said Hitoshi Yamamoto, CEO of Fortis Asset Management Japan. "If the cut is 25 basis points, the market's reaction will depend on the Fed's statement accompanying the decision."
He also said caution is likely to prevail before the Bank of Japan's tankan survey of corporate sentiment and settlement of stock index futures and options, both coming on Friday.
News of cash infusions into US bond insurer MBIA Inc and UBS were taken as votes of confidence in the financial sector and boosted Wall Street along with rate cut expectations, helping financial shares in Tokyo as well.
"The UBS news is big. It brought home anew the power of oil money and sent an assuring message that there is enough money out there and the financial world is in no danger of falling into a crisis," Yamamoto said. Japan's three biggest banks traded higher throughout most of the session, though profit-taking pared the gains at the close.
Mitsubishi UFJ Financial Group rose 0.7 percent to 1,228 yen and Sumitomo Mitsui Financial Group Inc edged up 0.6 percent to 966,000 yen. Mizuho Financial Group Inc slipped 0.3 percent to 635,000 yen. "While upward gains are still limited, overall sentiment is getting better," said Kenichi Hirano, operating officer at Tachibana Securities.
"I think we have passed the point where investors were trying to find whatever negative news to dump stocks," he said. Meanwhile, heavy machinery maker IHI Corp said it would book 30 billion yen ($269 million) in operating losses for the last business year ended in March after re-assessing the profitability of its plant and engineering projects.
The Tokyo Stock Exchange said it has placed IHI's stock on its supervisory post. A spokesman for the bourse said a company put on that post could be delisted if it is found to have made false securities statements and the impact of those actions is deemed serious.
The benchmark Nikkei ended the session up 0.8 percent at 16,044.72, the first finish above the 16,000 mark since November 7. The broader TOPIX gained 0.6 percent to 1,567.02. Trade was thin, with 1.7 billion shares changing hands, compared with last week's daily average of 2 billion. Advancing shares beat decliners by 907 to 664.
Meiji Dairies Corp rose 1.5 percent to 599 yen. The company said it is considering a price hike of at least 3 percent starting in the spring of 2008 after agreeing to a price increase with a group of milk producers, who have seen a steep rise in livestock feed costs due to growing use of grain for biofuel.
Rival Morinaga Milk Industry Co Ltd gained 3.2 percent to 353 yen. The firm also said it might lift the prices of its milk following the hike in raw milk prices.
Another bright spot was communications and related software firms, such as NTT Data, which jumped on expectations that Friday's Bank of Japan tankan survey of corporate sentiment will be positive for that sector. NTT Data rose 3.3 percent to 535,000 yen.
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