Nikkei average jumps

The Nikkei average climbed almost 3 percent on Tuesday, bouncing off a 2-1/2 year closing low marked the previous day on a rush of dividend-related buying and in tandem with rises for other risk assets on hopes that a European debt plan is in the works.
Market players said the Nikkei is unlikely to make further sustained gains this week as dividend-related buying ceases to be a factor. Murky prospects for eurozone officials to contain the European debt crisis and caution ahead of key US employment and Chinese manufacturing data next week will also keep gains in check. But they add that technical indicators show that downward momentum for Tokyo equities has slowed.
Tuesday was the last day for investors to buy many Japanese stocks and still get dividends on them for the April-September first-half, and dividend-related purchases provided a strong late afternoon push to the market. The Nikkei added 2.8 percent to 8,690.95, its first climb in three days, led by gains for major banks on hopes that a plan would take shape and prevent Europe's debt crisis from spreading to the global financial system.
The broader Topix index rose 2.7 percent to 748.55. The Nikkei remains well below its 25-day moving average of 8,726, suggesting the benchmark could be oversold. Moreover, the Relative Strength Indicator (RSI) and the Nikkei's level began to diverge from the second week in August and technical analysts say such a divergence suggests downward momentum is waning.
Asian stock markets followed Wall Street higher after CNBC television reported that a detailed plan was in the works to leverage the fund up to eight-fold and to use the European Investment Bank to issue bonds and buy up sovereign debt of troubled countries via the European Central bank.
An EU official in Brussels involved in crisis resolution dismissed the CNBC report as "just bizarre." The official said talks are in the early stages and those with the EIB involve infrastructure projects. Among banks, Mitsubishi UFJ Financial Group rose 4.3 percent to 343 yen and Sumitomo Mitsui Financial Group was up 3.4 percent at 2,148 yen.
Engineering firm JGC Corp jumped 4.7 percent to 1,959 yen, bouncing off a 6-month low, after brokerage CLSA upgraded the stock to a "buy" from "outperform" on expectations that the company will beat its own order and profit forecasts from the year ending March 2012.
Tokyo Electric Power Co, or Tepco, fell 6.2 percent to 243 yen, hitting a three-month low of 214 yen at one stage, after a report estimated compensation for Fukushima Daiichi nuclear plant disaster at least 3-4 trillion yen ($39-$52 billion).
The Nikkei business daily, citing projections that will be included in a government panel's report, said Tepco will run out of cash unless it either restarts idle reactors at its workhorse Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture or hikes electricity rates. Volume was moderate, with 1.9 billion shares changing hands on the Tokyo Stock Exchange's main board, below Monday's volume of 2.1 billion shares. Advancers trounced decliners 1,535 to 87.