Nikkei ends up 2.9%, led by Retailers on Positive Outlooks
Taiga Uranaka
Reuters
Tokyo, Japan
Friday, 11 April 2008
Japan's Nikkei average rose 2.9% on Friday, snapping a three-day losing streak, with retailers Fast Retailing Co and Seven & I Holdings jumping on solid profit outlooks.
Japan's second-largest bank Mizuho Financial Group extended gains after disclosing additional subprime-related trading losses.
"Mizuho shares were bought as investors saw negative news as having run its course for the time being. The market had priced in subprime problems to a considerable degree," said Harushige Kobayashi, head of the research department at Maruwa Securities.
High-tech shares such as Advantest Corp advanced after their U.S. peers lifted Wall Street on a brokerage upgrade of chip makers.
"The previous three days' losses were caused by trades in connection with SQ. Now, with that over, the lid on the market is off," said Katsuhiko Kodama, senior strategist at Toyo Securities.
The closely watched settlement price, known in Japan as the special quotation or "SQ", is calculated from the opening prices of the 225 shares on the Nikkei average on the second Friday of the month.
The price for options contracts expiring in April is likely to have come to 13,129.58, according to market sources.
The benchmark Nikkei ended up 2.9% at 13,323.73. The index gained 0.2 percent for the week.
The broader TOPIX index added 2.5% to 1,278.62.
Retailers High
Shares of Fast Retailing jumped 5.2% to 10,100 yen, the biggest contributor to the Nikkei, after the retailer raised its full-year operating profit forecast by 10% to 80.1 billion yen on the back of a recovery at its Uniqlo casual-clothing chain.
Seven & I Holdings shot up 11.6% to 2,895 yen after Japan's largest retailer said it would buy back and cancel up to 170 billion yen of its shares and Mitsubishi UFJ Securities lifted its rating on the stock to "1" from "2", saying the shares are cheap considering an expected improvement in return on assets.
Seven & I posted its first drop in full-year operating profit in six years, hit by weak consumer spending and tough competition, but it forecast a recovery this year as it closes unprofitable outlets.
Daiei Inc jumped 13.7% to 631 yen after the supermarket operator said it expects its operating profit this business year to rise 24.6% to 18 billion yen, better than a forecast of 13.6 billion yen in a poll of three analysts by Reuters Estimates.
"Investors' buying interest is turning towards domestic, non-manufacturing sectors since they're less affected by the stronger yen," said Maruwa's Kobayashi.
Mizuho extended gains, ending up 5.2% at 407,000 yen, after the banking group said during the midday break that it expected 400 billion yen ($3.9 billion) of subprime-related trading losses at its unlisted brokerage, Mizuho Securities, for the year ended in March.
The bank said it now expects a net profit of 310 billion yen ($3.1 billion) for the year to March 2008, down nearly 60% from its original estimate of 750 billion yen.
Takeda Pharmaceutical Co Ltd fell 2% to 5,300 yen, becoming the biggest drag on the Nikkei 225, after news of its $8.8 billion acquisition of U.S. biotech company Millennium Pharmaceuticals Inc in the biggest overseas buyout by a Japanese drugmaker.
Technology shares gained, with Advantest, the world's largest maker of microchip testers, up 5.3% at 2,795 yen.
On Thursday, Intel Corp shares jumped and helped lift all three major U.S. stock indexes after Banc of America Securities upgraded the U.S. semiconductor sector, saying a modest inventory buildup has eased.
Trade was moderate on the Tokyo exchange's first section, with 2 billion shares changing hands, compared with last week's daily average of 1.9 billion.