Japanese shares are likely to gain further next week on robust investor appetite as confidence grows in the government's ability to deliver economic growth, analysts said on Friday. In the week to May 17, Tokyo's benchmark Nikkei 225 index surged 3.63 percent, or 530.58 points, to finish at 15,138.12, the best close in more than five years.
The Topix index of all first-section shares rose 3.52 percent, or 42.64 points, to 1,253.24. "The market is literally bullish in a virtuous cycle, which tends to make players regard trading factors only from the positive aspect," said Takero Inaizumi, strategist at Mizuho Securities.
"Profit-taking can emerge from time to time but that can be easily erased by those who are eager to buy on dips," Inaizumi said.
Local media reported that Prime Minister Shinzo Abe would unveil the next stage of his economic measures, dubbed "Abenomics", which is intended to turn around years of deflation in the world's third-largest economy. On Thursday, Japan said its economy grew 0.9 percent in the quarter to March, pointing to a recovery as Tokyo and its hand-picked central bank team set about stoking the economic fire. The market will be focused on foreign exchange rates next week as the recent decline in the yen was a major factor behind the Tokyo market's strength, brokers said. A sharply weaker yen, pushed down by huge easing moves from the Bank of Japan, has helped inflate financial results for Japanese exporters. The weakening currency makes Japanese firms more competitive abroad and boosts the value of repatriated foreign income.
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