The Nikkei average booked its highest close in 15 months on Thursday, buoyed by tech firms such as Panasonic Corp on hopes the upcoming US earnings season will show a rebound in a key market for Japanese manufacturers. Mizuho Financial Group rose after Bloomberg reported the bank is considering a rights offering to boost capital, citing people familiar with the matter.
A rights offering would likely lead to less dilution of shareholder value than a straight share offering, which the market has been expecting, analysts said. Trade volume on the Tokyo exchange's first section hit a seven-month high for a second day, helped by trade in Japan Airlines, which is potentially headed for bankruptcy and delisting from the bourse.
"Hopes for a recovery in the economy and earnings have returned thanks to the stable state of the US economy and currency markets, though investors might be getting a little ahead of themselves in terms of the speed of recovery in earnings," said Masaru Hamasaki, senior strategist at Toyota Asset Management.
The benchmark Nikkei gained 1.6 percent to 10,907.68, its highest finish since October 2008. The Nikkei dipped on Wednesday after China surprised world markets by raising bank reserve requirements the previous day, sparking worries of slower demand from the world's third-largest economy.
The broader Topix also rose 1.6 percent, to 959.01. While worries about China receded, investors were keeping an eye on the outlook for Chinese stocks, said Noritsugu Hirakawa, a strategist at Okasan Securities. The Shanghai Composite Index was up 1.2 percent, after booking its biggest one-day fall in seven weeks on Wednesday.
US tech shares led the Dow to a 15-month high on Wednesday ahead of the widely anticipated earnings by bellwether Intel Corp later on Thursday. Shares of JAL rose 14.3 percent to 8 yen, after having fallen by its daily trading limit of 30 yen in the previous two days. More than 1 billion JAL shares changed hands during the day, accounting for nearly one-third of the trade on the exchange's first section.
High-tech stocks gained, with Panasonic shooting up 6.1 percent to 1,549 yen. Kyocera Corp added 2.4 percent to 8,520 yen and Sony Corp gained 2.6 percent to 3,075 yen. The United States is a key market for Japanese tech firms, so investors regard an improvement in US earnings as a positive for Japanese exporters.
Shares of Mizuho gained 5.7 percent to 186 yen, outperforming the banking index, which rose 2.3 percent. Goldman Sachs estimated last year that Mizuho, the worst-capitalised of Japan's major banks, may need to raise up to 1.9 trillion yen ($21 billion) by issuing new shares.
However, a rights issue would allow the bank to limit the dilution from its fundraising. The Tokyo exchange said in December it would relax rules on rights issues. Okuma Corp, Makino Milling Machine Co Ltd and other makers of manufacturing tools rose after an industry body said orders for Japanese machine tools posted a year-on-year gain for the first time in 19 months in December.
Okuma surged 13.7 percent to 583 yen and Makino gained 9.5 percent to 451 yen. Shares of shipping firm Mitsui O.S.K. Lines climbed 7.2 percent to 623 yen after the Nikkei business daily said the company likely made a pre-tax profit of 10 billion yen for October-December, up more than 500 percent from the preceding quarter. Robust resource demand from China, India and other emerging countries helped boost business for transporting iron ore and coal, the Nikkei said.
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