Japans Nikkei average rose 5.2 percent on Friday, its biggest one-day gain in over 3 months as Canon Inc and other exporters surged after data showed US retail sales stabilising and Bank of America reported a return to profit. Banks such as Mitsubishi UFJ Financial Group also made robust gains and the benchmark climbed 5.5 percent on the week, its largest weekly advance since late November.
Market analysts said the danger of the Nikkei falling to a 26-year low below 7,000 appeared to have receded for now, although it was too soon to say the market has really turned the corner for a sustained uptrend. "Its hard to know what the longer-term trends are, but I think its unlikely the Nikkei will break below 7,000 this month," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities. "Still, 7,500 to 7,600 is likely to be the upward limit for now."
The benchmark Nikkei gained 371.03 points to 7,569.28 in active trade, marking its biggest one-day percentage gain since December 15. The broader Topix rose 3.3 percent to 724.30, a day after posting its lowest close in 25 years. Bank of America on Thursday provided the weeks latest reassurance from the fragile US banking sector.
It joined Citigroup and J.P. Morgan Chase & Co in saying it had made a profit so far this year, adding that it should be able to ride out the recession without any additional help from taxpayers. But market players remained wary. "Theres still a lot of financial issues unresolved, especially in Europe, so we cant say for sure that this is a real turning point," said Yutaka Miura, senior technical analyst at Shinko Securities. "We really need to wait and see what happens in the United States later today, and over the weekend."
The market largely brushed aside news that Japanese Finance Minister Kaoru Yosano backed a US call for governments to pump more money into their economies, ahead of a meeting of G20 finance ministers in Britain. The Nikkei business daily reported that the Japanese government plans to expand the scope of a state-stock buying entity to include exchange-traded funds (ETFs). Most analysts said that while the report had little impact on Fridays trade, it was supportive for the market.
"Theres a lot of talk out there about various stimulus plans and stock support plans, and there has been for a while, but its hard for the market to respond positively to this without something actually being decided," said Shinkos Miura. "Of course, it will help keep the market from being sold." Canon shot up 8.6 percent to 2,475 yen, while industrial robot maker Fanuc Ltd surged 10 percent to 6,160 yen. Honda Motor Co climbed 7.5 percent to 2,220 yen.
Mitsubishi UFJ Financial Group climbed 5.8 percent to 419 yen. Mizuho Financial Group climbed 4.7 percent to 179 yen and Sumitomo Mitsui Financial Group advanced 6.3 percent to 2,850 yen. Seiko Epson Corp gained 8.5 percent to 1,212 yen after Sony Corp said it would start talks with Seiko Epson on an alliance in small-sized LCDs, including a possible purchase of some of Seiko Epsons display assets, in a move to strengthen its LCD operations.
Sony shares advanced 9.1 percent to 1,893 yen. But All Nippon Airways Co fell 1.1 percent to 366 yen after Credit Suisse cut its rating on Japans second-largest airline to "underperform" from "neutral" because it believes the stock is overvalued. Trade was active on the Tokyo exchanges first section, with 2.8 billion shares changing hands, compared with last weeks daily average of 2 billion. Advancing stocks outpaced declining ones by more than 3 to 1.