Japan's Nikkei average eked out a four-month closing high on Tuesday, buoyed by trading firms such as Mitsui & Co after gains in oil and metals prices, while automakers also edged up. Japan Airlines fell over 10 percent at one point to a record low after media reports that a state-backed turnaround fund now weighing whether to support JAL with loans and investments was considering a bankruptcy filing as one component of its restructuring plan.
In thin and choppy trade on the second to last trading day of 2009, the benchmark Nikkei spent much of the day in negative territory before edging up a mere 3.83 points to 10,638.06. It hit a fresh four-month intraday high of 10,683.12 in early trade.
"Investors seem to be using the last days of this year to search for theme stocks - companies connected to emerging markets, which are likely to remain strong next year, as well as resource-linked shares," said Noritsugu Hirakawa, a strategist at Okasan Securities.
The broader Topix rose 0.1 percent to 915.87. Twenty years ago on Tuesday the Nikkei marked a record high of 38,915.87 at the peak of Japan's asset price bubble, nearly four times the current level. Still, the benchmark has clawed back about 50 percent since hitting a 26-year closing low in March as global economic stimulus measures have helped turn around the world economy.
Though optimism is spreading about what may lie ahead in 2010 for the Nikkei, caution lingers as well. "The market appears to be looking at a slow recovery next year, though there are still likely to be some unseen risks ahead and the chance of some unpleasant surprises," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
"Yet I don't think we'll face anything as bad as what happened to markets after last year's Lehman failure." Others were even warier. "Caution will be also necessary as we head into the new year. It's hard to think the market will just keep rising as there's still a chance it could very well test another trough," said Yutaka Miura, chief technical analyst at Mizuho Securities.
Sources told Reuters on Monday the Enterprise Turnaround Initiative Corp of Japan has told creditors it may look to have JAL use the Corporate Rehabilitation Law, a process similar to Chapter 11 in the United States that could wipe out the value of JAL's shares. The ETIC has not ruled out an out-of-court restructuring in co-ordination with JAL's main creditors, the sources said.
No one at JAL could be immediately reached for comment. JAL ended down 8.3 percent at 88 yen after falling as low as 85 yen. Shares of Japanese exporters took a breather. Electronics parts maker Kyocera Corp fell 1.4 percent to 8,190 yen, chip-tester maker Advantest Corp lost 2.2 percent to 2,435 yen and Canon Inc slipped 1.3 percent to 3,910 yen.
Trading houses gained after oil touched a five-week high over $79 a barrel on Monday as expectations of colder weather in the United States and signs of economic recovery boostedd the outlook for fuel demand. Mitsui & Co rose 2.1 percent to 1,329 yen and Mitsubishi Corp gained 1.5 percent to 2,315 yen.
Shares of Pioneer Corp fell 4.6 percent to 289 yen after the struggling electronics maker said on Monday it would postpone the planned sale of shares to Honda Motor Co for the third time following similar announcements in June and September. Trade was light on the Tokyo exchange's first section, with 1.57 billion shares changing hands, below last week's daily average of 1.73 billion. Advancing stocks outnumbered declining ones, 905 to 630.
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