Japan's Nikkei stock average gained 1.9 percent on Thursday, buoyed by property firms after the central bank said it would accept bonds issued by REITs as collateral, although Honda Motor Co and other exporters were hit by a firm yen. Top brokerages such as Daiwa Securities Group jumped on a ratings upgrade, helping to buoy the overall market.
While banking stocks rebounded after a sharp sell-off and earnings surprises from US peers such as Northern Trust. Sony Corp fell more than 2 percent ahead of a widely expected earnings revision. After the close, it warned it would post a bigger-than-expected $2.9 billion operating loss this business year due to sliding demand, a stronger yen and costs to restructure its ailing electronics operations.
"The BOJ news was positive because that could help property firms with fund raising, but the impact on the overall market will be limited, as the market will continue to be driven by the performance of US stocks and currency markets," said Yukata Miura, senior technical analyst at Shinko Securities.
The Bank of Japan said on Thursday it will buy bonds issued by real estate investment trusts (REITs) as collateral for its market operations, a move it said was aimed at facilitating its money market operations.
In choppy trade, the benchmark Nikkei rose 150.10 points to 8,051.74, after earlier hitting its lowest point since November 21. The broader Topix climbed 1.1 percent to 795.91. Amid worries about the financial sector in Europe, the euro dropped 0.7 percent to 115.89 yen, hurting shares of exporters.
"Investors appear to be moving money from exporters to defensive stocks for now as it's hard to keep dumping shares considering they are rather undervalued at this point," said Takashi Kamiya, chief economist at T & D Asset Management. "In the last few days, eyes have been also shifting to Europe from the United States. The way that the euro and the pound have weakened will definitely deal a blow to Japanese exporters."
Japan's top brokerages surged after Credit Suisse upgraded the sector to "overweight" from "market weight" on an expected rebound, with Daiwa its top pick. Daiwa Securities, Japan's second-largest brokerage, surged 6.8 percent to 484 yen, while bigger rival Nomura Holdings jumped 4.7 percent to 642 yen.
Banks gained after US peers rose on earnings surprises from Northern Trust and PNC Financial Services, helping US banks reclaim some of Tuesday's losses that took the financial sector to a 14-year low. Top bank Mitsubishi UFJ Financial Group rose 0.8 percent to 487 yen and Mizuho Financial, Japan's No 2 bank, gained 1.4 percent to 220 yen. Defensive shares, especially drugmakers, surged, as they are seen as resilient in the face of an economic downturn.
Astellas Pharma Inc shot up 5.3 percent to 3,390 yen also after saying it and Ono Pharmaceutical Co had won approval to sell their osteoporosis drug in Japan, clearing the final hurdle to tap a $770 million market. Other drugmakers Eisai Co gained 5.6 percent to 3,400 yen and Daiichi Sankyo Co jumped 5.6 percent to 1,931 yen.
But Honda lost 3.4 percent to 2,015 yen and Toyota Motor Corp skidded 4.2 percent to 2,855 yen. Canon Inc slid 1.7 percent to 2,680 yen. The three stocks were the top drags on the Nikkei 225. Sony shares declined 2.6 percent to 1,938 yen. Trade was moderate on the Tokyo exchange's first section, with 1.9 billion shares changing hands, in line with last week's daily average. Advancing stocks outpaced declining ones by nearly 2 to 1.
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