Nikkei average rises

Short-covering in energy and domestic-demand stocks gave the Tokyo market a nudge higher on Thursday after two days of declines, but trade thinned out with investors jittery ahead of earnings announcements. Market players said the Nikkei average is poised for a gradual slide over the next few months as some firms enter the first earnings season since last month's quake unwilling to give forecasts for this financial year.
Reasons for caution include power shortages, lost production and lack of progress by Tokyo Electric Power Co in bringing its stricken nuclear plant under control. The benchmark Nikkei closed up 0.1 percent or 6.56 points at 9,590.93, while the broader Topix index gained 0.2 percent to 841.10.
Trading volume fell to its lowest level since the quake, with the total number of shares changing hands on the bourse's main board at 2.2 billion, well below elevated post-quake levels. Worries about the quake's impact on earnings have outweighed a recent slide in the Japanese currency to near an 11-month low of 122.55 yen to the euro and a half-year low of 85.54 yen against the dollar.
Looking long term, Barclays Capital has said it expects companies listed on the TSE's main board to post on average a fall of 12 percent in net profit for this financial year compared with its pre-quake forecast of a rise of 14 percent. Chubu Electric Power Co , Kansai Electric Power Co and Tokyo Electric Power were the biggest gainers on the Nikkei and the most actively traded shares.
Chubu and Kansai both jumped over 5 percent, but are still down some 15 percent since the quake, while Tokyo Electric rose 0.9 percent, after having plummeted 84 percent since March 10 to hit a record low of 292 yen on Wednesday on worries about huge compensation claims related to the disaster at its Fukushima Daiichi nuclear plant. "It was about time to see some corrective buying, with investors who have gone short this week covering their positions ahead of tomorrow's SQ," said Takashi Ohba, a senior strategist at Okasan Securities, referring to Friday's settlement of options, known in Japan as the special quotation.
Foreign investors were net buyers of Japanese stocks last week, and local market participants were keen to see if they would continue to buy them in the longer run. Overseas investors shifted back to net buying of Japanese equities to the tune of 144.7 billion yen ($1.69 billion) in the week to April 2, after having sold a net 13.2 billion yen the prior week, according to government data.
Between March 13 and 19, the week right after the quake and tsunami, foreigners logged record net buying of Japanese equities of more than 890 billion yen. Shares in electronics conglomerate Toshiba Corp, slipped 2.3 percent to 381 yen after Macquarie Securities cut the firm's target share price to 500 yen from 575 yen after the shares took a hit as the nuclear crisis in Fukushima unfolded, but kept its "outperform" rating.
"We believe that Toshiba's shares have been hit more by an adverse turn in sentiment surrounding the nuclear-related business due to the Fukushima incident, than by any fundamental deterioration in its business," the brokerage's Damian Thong said in a note to clients. Toshiba is among the 10 biggest post-quake losers out of the 225 Nikkei components, shedding some 24 percent since March 10 - the day before the quake - and underperforming the benchmark index, which after three weeks since the disaster still hovers some 8 percent below its early March levels.