The Nikkei share average rose 1 percent in holiday-thinned trade on Thursday, with Toyota Motor Corp and other battered stocks rebounding after the US Dow snapped a five-day losing streak. But Isuzu Motors Ltd fell 1.8 percent after a newspaper reported the Japanese truck maker plans to implement temporary pay cuts for all of its 8,000 full-time workers in Japan in response to a steep sales decline.
The automaker denied the report. "This is simply a rebound, and even small orders can exaggerate market moves as the number of participants is so small," said Tsuyoshi Segawa, an equity strategist at Shinko Securities. "The yen may be a bit softer against the dollar, but the stock market is paying little attention to the currency market now as it also lacks enough participants. Both markets are in the holiday mood."
The benchmark Nikkei extended its gains towards the close and rose 82.40 points to finish at the day's high of 8599.50, after losing 2.4 percent the previous day. The broader Topix gained 1.1 percent to 836.02.
Trade was extremely thin on the Tokyo exchange's first section, with 998 million shares changing hands, the lowest volume since May 2005 when excluding half-day trading sessions. That compared with last week's daily average of 1.9 billion.
Advancing stocks beat declining ones by nearly 2 to 1. US trading ended at 1 pm (1800 GMT) on Wednesday for Christmas Eve, with the Dow Jones industrial average closing up 0.6 percent. US markets will be closed on Thursday for Christmas, and they reopen on Friday.
Analysts say trade will likely quiet down further towards the year-end due to the suspension of some large stocks in connection with the transition to a paperless share system in Japan to be implemented on January 5.
Trade in 14 stocks listed on the Tokyo Stock Exchange including NTT and Mizuho Financial Group is suspended from December 25 to December 30 and will resume on January 5, according to the bourse. Toyota gained 2.3 percent to 2,845 yen. The stock slid 4 percent the previous day after the world's biggest automaker forecast its first-ever annual operating loss.
Rival Honda Motor Co gained 3.0 percent to 1,850 yen and Nissan Motor Co rose 2.7 percent to 304 yen. But Isuzu shed 1.8 percent to 107 yen. "The auto sector will probably have some technical rebounds here and there like today, but it will remain in the toughest position of all for a while," said Soichiro Monji, chief strategist at Daiwa SB Investments.
"I think the recovery of the US economy will likely lag behind that of the global economy and that would affect the auto sector which largely depends on US demand." JFE Holdings Inc rose 2.3 percent to 2,475 yen. The stock jumped more than 4 percent at one stage after the steelmaker lifted its full-year parent earnings forecasts for this business year, citing a dividend payment it would receive from unit JFE Steel.
JFE Holdings raised its operating profit forecast for the year to March to 176 billion yen ($1.95 billion) from the previously estimated 76 billion yen. It said in a statement its group earnings forecasts will not be affected by the upward revision. Its steel unit, the world's third-largest steel maker, also said it would cut its output by 26 percent in the October-March second half from the first half as demand from automakers and other customers plunges.