The Nikkei rose 0.46 percent on Friday, recouping some of the previous session's losses that came amid an Asian equity sell-off, as Advantest Corp and other exporters rebounded on a weaker yen and following calm trade in major overseas markets.
A string of positive media reports on earnings at major companies including Canon Inc and Toyota Motor Corp also encouraged investors to buy back recently battered high-tech and auto shares. Tokyo Broadcasting System Inc jumped by its daily price limit of 13 percent at one point after Rakuten Inc said it planned to buy additional shares in the broadcaster.
Zenshiro Mizuno, senior managing director at Marusan Securities Co Ltd, said the market lacks solid buyers and is susceptible to speculative moves. "The problem is that we don't see substantial buying. That's why the market easily swings and gets affected by the moves of speculators," he said. "Besides, investors are in no rush to take risks before corporate earnings are announced."
The Nikkei closed up 80.65 points at 17,452.62 after booking its biggest one-day fall in a month the previous day. The broad TOPIX index added 0.18 percent to 1,710.07. Yoshinori Nagano, senior strategist at Daiwa Asset Management, said Japanese institutional investors are generally cautious about buying shares, as they have not received much funds from retail investors to be allocated to Japanese shares since the new fiscal year began this month.
"Japanese individuals have been putting more money into investment trust funds, but their money is flowing into funds with a focus on foreign bonds and stocks, not on Japanese equities," he said. Unless foreign investors show more buying interest in Japanese stocks, the upside of the Nikkei will be limited, he said.
Canon rose 0.8 percent to 6,560 yen, while Toyota added 1.2 percent to 7,380 yen. Both shares benefitted from the weaker yen, which boosts profits when earnings from abroad are brought home. The shares were also buoyed by media reports forecasting positive earnings results.
The Nikkei business daily reported on Friday that Canon is likely to report a 14 percent increase in net income for 2007, while Toyota is likely to book an operating profit of 2.25 trillion yen ($19 billion) for the past business year, slightly above its estimate of 2.2 trillion.
KDDI Corp became the largest contributor to the Nikkei's rise, climbing 1.8 percent to 976,000 yen after the Nikkei business daily reported Japan's No 2 phone operator will likely book an operating profit of about 350 billion yen for the year ended March 31, higher than the company's recently revised estimate of 342 billion yen.
Among other notable gainers, TDK Corp added 1.2 percent to 10,260 yen after US recording disk and tape maker Imation Corp said on Thursday it would buy TDK's brand and sales operations in recording media for $300 million in stock and cash.
Goldman Sachs said in a report on Friday it raised the target price for TDK shares to 12,500 yen from 11,500 yen and retained the stock on its Conviction Buy List.
Trade volume fell to its lowest in two weeks, with 1.79 billion shares changing hands, before major companies start posting their earnings results next week for the year ended March 31 and projecting outlooks for the new year. Declining shares beat advancers, 915 to 676.