RTRS: Nikkei climbs 2.6 percent on yen as Dubai jitters ease
By Aiko Hayashi
TOKYO (Reuters) - Japan's Nikkei average gained 2.6 percent on Monday, buoyed by bank shares as concerns about debt default in Dubai eased, while Canon Inc and other exporters gained after the yen retreated from a 14-year high on the dollar.
Signals were mixed on how long the flight to less risky assets might last, with U.S. shares easing back up off their lows by the end of a short trading day on Friday as some market players said worries about Dubai had been offset by the desire of investors to take profits as the year-end approaches.
Dubai's crisis exploded last week when the emirate, known for flashy lifestyles and the world's tallest building, said it would delay payment on debt issued by one of its flagship firms, angering investors and sending global markets sharply lower..
"There's a growing view in the market that places such as Abu Dhabi could help out Dubai, and that Dubai's debt problems might turn out to be temporary," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.
Abu Dhabi, wealthy capital of the United Arab Emirates, will "pick and choose" how to assist debt-laden neighbor Dubai, a senior official said on Saturday, after fears of a Dubai default sent global markets reeling.
"Gains today are due to a rebound, and for further clues for trading, investors will likely shift back their focus to U.S. economic indicators, including jobs data due later in the week," Nakanishi said.
The benchmark Nikkei climbed 234.40 points to 9,315.92, after rising as much as 3 percent at one stage.
The index shed 3.2 percent on Friday to a four-month closing low, marking its fifth straight week of losses -- a run unseen since June-July 2008.
The broader Topix advanced 3 percent to 835.16.
Market players said the Nikkei had been sharply oversold last week and that this led to broad short-covering, including some buying by day traders.
But Mitsubishi UFJ Securities strategist Nagayuki Yamagishi said the Nikkei's gains were likely to slow as it neared 9,600, with investors eager to take profits as the end of the year approaches.
"Markets are also looking to U.S. indicators for clues, especially data on the Christmas shopping season, which should start to become clearer as the week goes on," he added.
American consumers shopped for more bargains at the start of the U.S. holiday season and spent significantly less per person than a year ago, according to early data on shopping trends over last weekend.
BANKS GAIN GROUND, EXPORTER BOOSTED BY YEN
Banks gained on short-covering after recent extended losses due to worries that other banks might follow Mitsubishi UFJ Financial Group into capital raisings, with Dubai having added to the downward pressure.
MUFG shot up 7.2 percent to 476 yen, No. 2 bank Mizuho Financial Group surged 8.1 percent to 160 yen and No. 3 lender Sumitomo Mitsui Financial Group climbed 7.1 percent to 2,805 yen.
Global markets have gained ground after banks outside the Gulf said they were not heavily exposed to Dubai debt.
Japanese financial institutions, including three major banks, face loan exposures of about 100 billion yen ($1.2 billion) in Dubai, the Nikkei business daily reported on Saturday.
Exporters were getting an additional boost after the yen retreated from a 14-year high hit last week. Investors fret about a stronger yen as it eats into exporters' profits when repatriated.
The dollar was trading around 86.40 yen, well off a 14-year low of 84.82 yen hit on Friday on EBS.
Canon advanced 3.8 percent to 3,320 yen and Kyocera Corp gained 1.9 percent to 6,860 yen. Toyota Motor Corp climbed 2.7 percent to 3,390 yen.
Among other notable stocks, Shares of Sumitomo Corp jumped 4.3 percent to 847 yen after Credit Suisse lifted its rating on the trading house to "outperform" from "neutral," saying the stock looks heavily undervalued.
Miyazaki Bank plunged 19.2 percent to 311 yen after it announced on Friday that it would raise up to 12.2 billion yen through a public share issue and a greenshoe option to shore up its capital.
The share issue would raise the number of Miyazaki Bank's shares outstanding by 20 percent.
