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Nikkei poised for 3-wk closing high as techs climb

Published 10/20/2009, 01:05 AM
Updated 10/20/2009, 01:09 AM
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* Tech stocks gain after Apple, TI results beat estimates

* China-linked shares rise on hopes of strong economic data

* Resource shares up on higher commodity prices

TOKYO, Oct 20 (Reuters) - Japan's Nikkei average is poised to hit its highest close in three weeks on Tuesday, buoyed by tech shares such as Kyocera Corp after a wave of solid U.S. earnings helped underscore that the economic recovery continues.

Shares in companies with a large exposure to the Chinese market, such as Hitachi Construction, a maker of earth-moving equipment, gained on expectations of strong economic growth ahead of GDP data later this week.

Apple Inc beat estimates as its iPhone and Mac sales hit quarterly records, while Texas Instruments beat expectations on strong demand from every industry that uses its chips, from cars to computers and phones.

"There's a sense of relief in the market about corporate earnings as results by U.S. high-tech companies have been better than expected so far," said Takahiko Murai, general manager of equities at Nozomi Securities.

"Another source of reassurance comes from the view in the market that China would probably come up with additional stimulus measures if its economic growth rate were to slow down."

The benchmark Nikkei rose 0.8 percent to 10,318.29, on track for its highest finish since Sept. 24.

The broader Topix gained 0.7 percent to 912.47.

On Monday, U.S. stocks rose to fresh 12-month highs, lifted by investor optimism about corporate earnings.

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Although foreign investors, long a key driver of the Nikkei, are buying, market players said it was still relatively limited compared with other major share markets and was not providing as much of a boost as might be hoped.

"Foreign investors remain lukewarm towards Japanese shares in comparison to other Asian markets, so this will make it hard for the Nikkei to renew its high for the year," said Kenichi Hirano at Tachibana Securities.

"Most of those who are buying Japan appear to be doing it to get country balance in their portfolios rather than being motivated by a strong interest in the shares themselves."

Murai at Nozomi Securities said a weaker yen is one key factor for further gains in the benchmark Nikkei.

"If the dollar/yen trades at around 92 yen, the Nikkei could climb back to around 10,500 as many exporting companies have set their exchange rate assumptions between 92 and 95 yen," he said.

The dollar was trading around 90.30 yen, down 0.3 percent on the day. Investors welcome a weaker yen as it boosts exporters' profits when they are repatriated.

EARNINGS BOOST

Apple's profits and sales streaked past Wall Street forecasts with sales of Mac computers jumping 17 percent, and its shares shot up in extended trading.

Kyocera gained 1.5 percent to 8,110 yen, memory maker Tokyo Electron rose 0.9 percent to 5,740 yen and Nikon, a top maker of chip-making steppers, climbed 1.8 percent to 1,779 yen.

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China-linked shares rose after a senior Chinese official said on Monday that China's gross domestic product grew more than 7 percent in the first nine months and that China would have no difficulty reaching the government's full-year GDP growth target of 8 percent..

GDP figures for the third quarter are due on Thursday, with economists polled by Reuters expecting year-on-year growth of 8.9 percent.

Komatsu, the world's second-biggest maker of earth-moving equipment, rose 1.7 percent to 1,827 yen and Hitachi Construction gained 1.8 percent to 2,265 yen. The Nikkei business daily also said Komatsu likely secured about 10 billion yen ($110 million) in operating profit for the July-September quarter on strong demand for construction machinery in China and other emerging countries.

Trading houses extended gains made on Monday on rises in oil and metals prices, particularly copper.

Mitsubishi Corp advanced 2.8 percent to 2,040 yen, Mitsui & Co gained 2.3 percent to 1,292 yen, and Sojitz added 2.3 percent to 178 yen.

Shares in oil and gas field developer Inpex jumped 3.5 percent to 828,000 yen.

Liquid crystal display glassmakers Asahi Glass Co Ltd and Nippon Electric Glass rose after bigger rival Corning Inc said a power disruption at its LCD plant in Taichung would hurt its glass production.

Asahi Glass rose 1.9 percent to 809 yen and Nippon Electric Glass was up 1.6 percent at 975 yen on expectations that any shortage at Corning, the world's largest maker of glass for LCD screens, would help rivals' sales. (Reporting by Aiko Hayashi and Elaine Lies; Editing by Michael Watson)

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