Japan's Nikkei inched up on Wednesday to end a seven-straight session losing run, with struggling TV maker Sharp Corp rallying on news of possible investment, although looming US fiscal woes and the euro zone's debt crisis capped gains.
Debt-stricken Sharp jumped 7.2 percent as investors covered bearish bets after sources said US Intel Corp and Qualcomm Inc are in talks to jointly invest about 30 billion yen ($378 million) in the Japanese company. It was the sixth-most traded stock on the main board by turnover.
But other exporters headed lower on concerns that the US 'fiscal cliff' - about $600 billion of spending cuts and tax increases to take effect in the new year - may push the world's largest economy into recession and crimp demand for their products. In Europe, sentiment among Germany's analysts and investors sank in November as the euro zone's debt crisis pounded the continent's top economy, which looks increasingly at risk of joining the region's periphery in recession. Among the exporters, Toyota Motor Corp, industrial robot maker Fanuc Corp and construction machinery maker Komatsu Ltd lost between 0.8 and 1.6 percent.
The Nikkei ended 3.68 points higher, or 0.04 percent, at 8,664.73 in light trade, with volume at 68 percent of its daily average for the past 90 days, indicating investors' wariness amid stuttering global growth and dismal corporate earnings. "Those who are trading today actively are either individual investors or day traders who can take risks, and they are trading on small cap stocks," said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities. "Since long-term investors are staying on the sidelines, total volume is low."
Kyodo news agency reported, minutes before the market close, that Japan's Prime Minister Yoshihiko Noda told a ruling party official that he wants to call an election for parliament's lower house on December 16. The benchmark Nikkei had lost 4.3 percent during the seven-straight session of decline, its longest such losing streak in seven months.
But the index is still up 2.5 percent this year, lagging a 9.3 percent gain in the US S&P 500 and a 10.7 percent rise in the pan-European STOXX Europe 600 index. Global investors remain downbeat on Japanese equities, with a net 39 percent of asset managers saying in November that they are planning to be underweight on Japan in the next 12 months, versus 23 percent in October, Bank of America Merrill Lynch's monthly survey of fund managers showed.
Weak earnings from Japanese companies also did not help, with 58 percent of the 147 Nikkei firms that have so far reported quarterly results undershooting market expectations, data from Thomson Reuters StarMine showed. That compared with 30 percent of S&P 500 companies missing analysts' forecasts. The broad Topix was flat at 722.41 on Thursday. Aiful Corp, a consumer financing firm, jumped 30 percent on short-squeeze and was the most traded stock after it reported a 53.6 percent year-on-year rise in first-half operating profit. The stock has rallied 189 percent this year.
Driven partly by its year-to-date gain, investors have been shorting Aiful. According to data provider Markit, about 70 percent of its stock that is available to be borrowed went out on loan as of November 12, down from 78.31 percent on November 8. Shares in megabanks were mixed ahead of their results later in the day, with Mitsubishi UFJ Financial Group down 1.4 percent and Mizuho Financial Group off 0.8 percent but Sumitomo Mitsui Financial Group held steady.
Societe Generale said in a report that Japanese financials, including banks, insurers and securities firms, should outperform in 2013 after turning a strong performance this year. The banking sector is up 4.8 percent this year, while securities firms have climbed 24.6 percent.
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