Japan's Nikkei average hit a 15-month high on Friday, boosted by tech shares such as Advantest Corp that climbed after Intel Corp reported a quarterly profit that beat expectations, underscoring hopes for a 2010 tech sector recovery.
Japanese cosmetics giant Shiseido jumped 5.1 percent after it said it would buy California-based beauty product firm Bare Escentuals Inc for $1.7 billion. Trading volume on the Tokyo exchange's first section fell back slightly after two days of seven-month highs, though Ministry of Finance data showed that foreign investment in Japanese stocks surged to 733 billion yen ($8.05 billion) for the week of Jan 3-9, its highest since July 2007.
"The Nikkei is within sight of 11,000 now, and while techs are strong because of Intel we're also seeing good buying of a lot of large-cap blue chip stocks, such as Toyota and Sony," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities. But other analysts said profit-taking was weighing on the benchmark as it drew near to 11,000, with investors wary after recent sharp gains.
The Nikkei rose 0.7 percent or 74.42 points to 10,982.10, a 15-month closing high, despite flirting with negative territory during the day. It gained 1.7 percent on the week for its seventh positive week, its best such run since March-May 2008. The broader Topix gained 0.8 percent to 966.40.
Though volume this week has been boosted by active trade in Japan Airlines, analysts said foreigners appeared to be taking more of an interest in Japanese shares in general, with many saying this was due to a need to rebalance their portfolios. "In September, October, November there was no interest in Japan, no matter who you talked to," said Shinichi Ichikawa, chief equity strategist at Credit Suisse in Tokyo.
"But this is just rebalancing. People are simply taking very underweight Japan in a more neutral direction." Other analysts noted that since the business year for many foreign investors starts in January, there is often a flow of new money into Japan in that month. Finance Ministry statistics show that January frequently sees active foreign buying.
After the bell on Thursday, Intel, the world's largest chipmaker, announced fourth-quarter revenue and a profit margin outlook that handily beat Wall Street's expectations, helped by better pricing and demand for server chips. Energy-related stocks declined after oil prices fell for the fifth day running on Friday as weak US economic data such as retail sales raised concerns about a recovery in demand in the world's biggest oil-consuming market.
Refiner Nippon Oil Corp slipped 1.3 percent to 445 yen and Nippon Mining Holdings retreated 1.2 percent to 413 yen. Shiseido rose to 2,040 yen after Japan's largest cosmetics company said it will buy Bare Escentuals in a cash deal in which it is offering $18.20 per share, a 43 percent premium over Bare Escentuals' closing price on the Nasdaq on Thursday.
Murata Manufacturing Co Ltd and other electronic parts makers gained ground after Goldman Sachs upgraded its coverage view on the electronic component sector to "attractive" from "neutral", saying parts supply will likely stay tight throughout the year starting on April 1, supporting product prices. Shares in Murata were up 6.7 percent at 5,180 yen, while Nihon Dempa Kogyo Co Ltd rose 9.3 percent to 1,966 yen.
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