The Nikkei share average rose 0.69 percent in thin trade on Wednesday as Sony Corp and other exporters rose as the dollar extended its gains against the yen. Air-conditioner maker Daikin Industries Ltd advanced on earnings hopes, while a positive outlook from Promise Co Ltd helped consumer lending firms.
After the market closed, Fujitsu Ltd said its British unit would launch a tender offer bid for French system integrator GFI Informatique in a deal that would cost the Japanese chips-to-computers conglomerate up to 419 million euros. Prior to that, Fujitsu ended up 1.1 percent. Trade was relatively thin with many participants away for Japan's Golden Week spring holidays. Japanese markets were closed on Monday for a national holiday and will also be closed on Thursday and Friday.
The dollar surged to a two-month high against the yen, setting a positive tone in the market. "The market has factored in conservative corporate earnings forecasts and uncertain outlooks for the US economy, and market sentiment seems to be improving," said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities Co Ltd.
The Nikkei rose 119.94 points to 17,394.92, while the broad TOPIX index added 0.65 percent to 1,704.22. Trade activity fell to its lowest since March 26 with just 1.71 billion shares changing hands on the Tokyo exchange's first section. Advancing shares outnumbered decliners nearly two to one.
So far, 279 non-financial firms listed on the first section of the Tokyo Stock Exchange have announced their earnings. They expect an average 8.2 percent rise in net profit for the year to March 2008, although on a recurring profit base, their expected growth is just 1.9 percent, according to Shinko Research Institute Co Ltd.
Toru Kitani, senior investment manager at Sompo Japan Asset Management, said earnings at US firms were strong, which was encouraging, but there are worrying signs in Japan. Data last Friday showed that Japan's core consumer prices fell more than expected in March, when industrial production also fell from a month earlier despite forecasts for a rise.
"The economic data out in the past one or two weeks is not impressive," he said. "If you are brave enough to bet that things will pick up later in the year and now is the bottom, you would buy stocks now," he added, noting that he would need to see more data as well as earnings to make investment decisions.
Shares of Daikin jumped 5.5 percent to 4,210 yen. The company's operating profit will likely jump 25 percent to a record high this business year due to strong demand for air conditioners in Europe and Asia, the Nikkei business daily reported on Wednesday.
Japan Airlines Corp (JAL) slipped 0.4 percent after the Nikkei business daily said Japan's largest airline would post a group net loss of about 16 billion yen for the past business year instead of the previously projected profit of 3 billion yen. Promise, a consumer finance company, surged 4.6 percent to 3,840 yen as it forecast a return to profit this business year after losing roughly $3.2 billion amid a crackdown on the industry by lawmakers and the courts.
Consumer Electronics Company Sony rose 1.4 percent to 6,410 yen, recouping its earlier losses and electronics parts maker Kyocera Corp added 1.7 percent to 11,750 yen.