Japans Nikkei average jumped 4.6 percent on Wednesday, posting its biggest rise in 6 weeks a day after hitting a 26-year closing low, as financial shares gained after Citigroups chief executive said the US bank was making profits. Toshiba Corp shot up more than 9 percent after a newspaper reported it may achieve an operating profit of about 100 billion yen ($1 billion) next business year, while other tech shares climbed in the wake of strong gains by their US peers.
US stocks posted their best day in four months on Tuesday after Citigroup Chief Executive Vikram Pandit said the company was profitable in the first two months of 2009 and voiced confidence about its capital strength, easing concerns about the banks survival prospects.
"Tokyo shares were saved by the United States, and whether the rally continues or not depends largely on what Wall Street does tonight," said Masayoshi Okamoto, head of dealing at Jujiya Securities. "Given the probable buying by public pension funds anytime the Nikkei heads close to 7,000, I think were unlikely to break below that this month. But going over 7,500 is equally unlikely due to profit-taking."
The market mostly shrugged off data showing Japans core private-sector machinery orders fell 3.2 percent in January from the previous month, slightly better than a median market forecast for a 4.5 percent fall. "Economic indicators are still bad, but inventories are decreasing, and theres been some improvement in service sector sentiment," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"While theres still the chance we could fall below 7,000, it wouldnt be the start of any plunges. I think we may be close to a turning point." The benchmark Nikkei gained 321.14 points to 7,376.12, marking its biggest one-day percentage gain since January 27 and coming right after it ended Tuesday at 7,054.98, its lowest close since October 1982. The broader Topix rose 2.7 percent to 722.28.Financials surged in the wake of the Citigroup news, though most trimmed their gains by the close.
Mitsubishi UFJ Financial Group, Japans top lender, rose 4.1 percent to 411 yen. Mizuho Financial Group climbed 5.4 percent to 176 yen and Sumitomo Mitsui Financial Group gained 4.8 percent to 2,820 yen. Resona Holdings, Japans fourth-largest bank, missed the updraught to drop 4.6 percent to 1,564 yen after Credit Suisse downgraded its shares to "neutral" from "outperform" and lowered the target price to 1,490 yen from 1,650 yen.
The downgrade came after Resona, effectively nationalised after it nearly collapsed under a mountain of bad loans, said on Tuesday it will return $1.8 billion of bailout money by buying back preferred shares from the government, as the bank continues to chip away at its massive public debt.
Kyocera Corp and other tech shares climbed after US bellwethers such as Apple Inc jumped on Tuesday, halting a three-day sell-off in the sector and sending the Philadelphia Semiconductor Index up 8.1 percent. Kyocera rose 6.6 percent to 5,950 yen and Canon Inc climbed 6.6 percent to 2,275 yen. TDK Corp rose 8.3 percent to 3,390 yen and Advantest Corp gained 5.9 percent to 1,287 yen.
Real estate investor Pacific Holdings Inc remained untraded with a glut of sell orders at 1,614 yen, down 300 yen or 15.7 percent from Tuesdays close, after it filed for bankruptcy protection with about $1.65 billion in debt, the countrys third-biggest failure this year. Trade was moderate on the Tokyo exchanges first section, with 2 billion shares changing hands, in line with last weeks daily average. Advancing stocks outpaced declining ones by more than 3 to 1.