TOKYO, Dec 2 – Japan’s Nikkei stock average edged up 0.4 per cent on Wednesday to close at a two-week high, with short-covering buoying the market as the yen fell against the dollar while metals shares rose after gold hit a record high.
Silicon wafer maker Sumco dragged on the market as it plunged nearly 9 per cent after swinging to an operating loss.
New funding plans by the Bank of Japan to support the economy announced after the close on Tuesday were greeted with disappointment although not enough to send the market lower.
Market players said they were now focusing on a meeting between Masaaki Shirakawa , BoJ governor, and Yukio Hatoyama, prime minister, set for later on Wednesday.
The BoJ announced that it would offer Y10,000bn ($115bn) in new short-term funds, but stopped short of more aggressive measures to support the economy.
“The market wasn’t happy after the announcement, but short-covering is preventing further falls – partly on the weaker yen, and partly on gains by Chinese shares,” said Noritsugu Hirakawa, a strategist at Okasan Securities.
“Plus hopes that something may emerge from the meeting today between Shirakawa and prime minister Hatoyama are making it hard to sell.”
The benchmark Nikkei inched up 36.74 points to 9,608.94 to close at its highest level since November 18. The broader Topix rose 0.1 per cent to 858.74.
Mr Shirakawa said the new funding operation the central bank announced on Tuesday could be considered quantitative easing in a broad sense.
The BoJ said it would pump more cash into the banking system after an emergency meeting which it called in the face of political pressure to help fight deflation and avert recession before upper house polls next year.
“It’s not as if the market didn’t welcome the BoJ’s move at all because we can still expect some impact as the central bank is set to supply money,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.
“But the meeting’s result was less than the market had expected and its effectiveness appears to be also limited.”
Analysts said that long-term, Japan-specific factors, including the yen’s strength and policy uncertainty, were keeping the Nikkei an underperformer among Asian markets once again.
The MSCI index of Asia Pacific stocks traded outside Japan rose 1.2 per cent.
“Investors don’t know whether to believe in what’s being done about the Japanese economy, and this is leading to profit-taking at the highs,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
The dollar had risen 0.3 per cent on the yen and was hovering around 87 yen. Investors fret about a stronger yen as it eats into exporter profits when repatriated.
Honda Motor rose 2.1 per cent to Y2,865 and Toyota Motor gained 1.1 per cent to Y3,560 yen.
Tokyo Electron advanced 3.9 per cent to Y5,050, gaining with other high-tech exporters on a Wall Street rally and a rise in the PHLX Semiconductor index of more than 3 per cent the previous day.
Credit Suisse also lifted its rating on Tokyo Electron, the world’s second-largest semiconductor equipment maker, from ”neutral” to “outperform”.
Sumitomo Metal Mining and other metals shares gained as metals prices climbed, with gold rising to record levels and copper surging to a 15-month high as positive manufacturing data in the US and China bolstered the economic outlook.
Sumitomo Metal Mining, a non-ferrous metal smelter, rose 1 per cent to Y1,457, and fellow smelter Dowa Holdings gained 2.3 per cent to Y490.
Trade was active on the Tokyo exchange’s first section, with 2.2bn shares changing hands, compared with last week’s daily average of 2bn.
Declining stocks outnumbered advancing ones, 849 to 713.
