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Nikkei edges up, energy shares gain on oil rise

Published 06/23/2009, 09:15 PM
Updated 06/23/2009, 09:16 PM
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* Nikkei edges up, but bearish signal nears

* Energy shares up after Tuesday oil rise

* Showa Shell Sekiyu surges on solar facilities report

TOKYO, June 24 (Reuters) - Japan's Nikkei stock average edged up 0.5 percent on Wednesday with energy shares such as Inpex climbing after crude oil surged the day before, but gains were limited by wariness ahead of a Federal Reserve meeting. Showa Shell Sekiyu surged over 9 percent after the Nikkei business daily reported that the company, Japan's fifth-biggest oil refiner, plans to work with Saudi Arabian Oil Co to jointly set up small-scale solar power facilities in Saudi Arabia next year and later in emerging countries.

But market players said the Nikkei was likely to tread water after falling 2.8 percent the day before, with scattered bargain-hunting unlikely to lift the average much in the face of bearish technical signals and uncertainty ahead of the end of the Fed meeting later on Wednesday.

"To say that investors globally are getting out of riskier assets is probably an exaggeration, but there's no question that people are taking profits and interest in riskier assets is receding a bit," said Koichi Ogawa, chief fund manager at Daiwa SB Investments.

"After the new quarter starts in July people may be more eager to take on those riskier assets again, but the situation is very hard to read."

The benchmark Nikkei gained 39.57 points to 9,589.18, while the broader Topix rose 0.3 percent to 904.17.

The Nikkei's 25-day moving average is nearing its five-day moving average and could soon cross above it, a move known as the "Death Cross" that is often a bearish signal.

But a similar pattern appeared in late April, where an apparently imminent Death Cross was avoided at the last moment and instead signalled the bottom of a brief dip.

For now, support appears to be holding at around 9,500, with oil-linked shares strong even though crude oil was paring its 2.6 percent rise and fell back below $69 on Wednesday.

Distributor Nippon Oil gained 4.7 percent to 562 yen and Inpex rose 2.7 percent to 734,000 yen.

Showa Shell Sekiyu soared 9.2 percent to 1,072 yen, becoming the biggest contributor to the Nikkei. Trading houses gained on Tuesday's oil rise as well as on a bounce by copper off recent lows, with Mitsubishi Corp climbing 2.1 percent to 1,750 yen and Mitsui & Co up 2.3 percent to 1,138 yen.

Tokyo Steel Manufacturing Co Ltd rose 5.2 percent to 1,189 yen after Goldman Sachs started coverage of the small mill with a "buy" and added it to the brokerage's conviction buy list, citing strong growth potential.

"We believe no matter what happens to the rest of the Japanese steel sector, Tokyo Steel will have something going for it that no other peer does: growth," Goldman analyst Rajeev Das wrote in a note to clients. (Reporting by Elaine Lies; Editing by Edwina Gibbs)

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