Japan's Nikkei average rose 1.5 percent to a one-month high on Thursday as financial firms extended gains, but energy was limited by wariness ahead of US jobs data and earnings from major Japanese firms next week.
Casual-clothing seller Fast Retailing Co Ltd rose 4 percent and Toshiba Corp jumped 5.9 percent after saying it was in the race for four nuclear reactor orders in the United States, which other firms estimate to be worth a total of $14 billion.
Mitsubishi UFJ Financial Group extended gains to finish up 3.1 percent at 992 yen, having risen more than 100 yen since April 1 as credit concerns eased after a capital boost by Lehman Brothers and a write-down by Swiss Bank UBS.
"There's a lot of investor short-covering on financials based on reduced credit worries," said Norihiro Fujito, general manager at Mitsubishi UFJ Securities.
"Though things are gradually heading back towards normal it's still going to take time to determine whether we've hit the bottom. Also, few institutional investors are going to be selling this early in the new fiscal year." The Nikkei benchmark gained 200 points to 13,389.90, its highest since February 29. The broader TOPIX rose 1.4 percent to 1,299.64.
But in a sign of possible trouble ahead, Nomura Securities cut its rating on the auto sector to "neutral" from "bullish", citing a weak US market, rising raw material costs and the yen's gains against the dollar. Though investors are waiting for the US jobs data on Friday, they are also turning their eyes towards the Japanese corporate earnings season, which gets rolling next week with retailer Aeon Co Ltd
Corporate Japan's five-year run of record profits appears in danger of coming to an end in the business year that started this month. Daiwa Institute of Research predicts the recurring profit growth of 300 large firms it covers will slow to 4.2 percent this year from 8.3 percent last year. That forecast is based on a dollar/yen rate of 105 and euro/yen rate of 150.
It estimates growth of just 1 percent if the exchange rates end up settling at 100 and 145 yen. Toshiba rose to 778 yen, among the top percentage gainers in the Nikkei. Units of utility firms Southern Co and SCANA Corp have indicated they would use Toshiba's Westinghouse AP1000 reactor technology in applications to the US Nuclear Regulatory Commission
The news sent up other nuclear-related firms, with Japan Steel Works Ltd jumping 5.4 percent to 1,898 yen. The company makes nuclear power generator components such as high pressure reactor vessels.
Top Japanese bank Mitsubishi UFJ Financial Group finished at its highest level since the end of February. No 3 bank Sumitomo Mitsui Financial Group also surged higher, gaining 3.7 percent to 765,000 yen. Mizuho Financial Group, which dipped into negative territory in morning trade, climbed 2 percent to 412,000 yen.
Toyota Motor Co, which Nomura cut to "neutral" from "buy", fell 1.5 percent to 5,160 yen and Honda Motor Co Ltd, which was downgraded to "reduce" from "neutral", declined 1 percent to 3,080 yen.
Fuji Heavy Industries Ltd fell 1.6 percent to 431 yen after the brokerage cut its rating to "reduce" from "neutral". Fast Retailing was up 4 percent at 9,600 yen, a gain of 370 points. Trade picked up, with 2.07 billion shares changing hands, compared with last week's daily average of 1.71 billion. Advancing shares beat decliners by 952 to 627.
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