Japan's 225-issue Nikkei Stock Average edged up 0.25 percent on Tuesday, after optimistic manufacturing data from the U.S. lifted market sentiment. Initial gains however, which saw the Nikkei rise to a 15-month intraday high, were largely erased by a strengthening yen leading to profit taking. Japan's key benchmark Nikkei added 27.04 points from Monday to close at 10.681.83 having hit a high of 10,791.04 in the afternoon. Tuesday marks the highest close since Oct. 3, 2008. The broader Topix index of all First Section issues on the Tokyo Stock Exchange gained 3.82 points, or 0.42 percent, to 919.57. Yen purchasing in the currency market which elevating its value Tuesday was sparked by news that Sumitomo Mitsui Financial Group will issue 800 billion yen (8.7 billion U.S. dollars) in common shares this month to raise its capital. A flurry of purchasing of diversified banking issues in the afternoon was quickly halted as the share issuance amount turned out to be less than the market anticipated and investors looked to the Japanese currency as a more solvent platform, analysts said. Additionally and despite better-than-expected U.S. manufacturing data initially boosting exporters who rely heavily on American markets, a resurgent yen advancing 0.8 percent against the dollar to around 91.80 yen, sparked profit-taking which weighed on the market, particularly exporter and tech-related issues, brokers said. Data released by the Japan Automobile Dealers Association on Tuesday afternoon showed that sales of new cars, trucks and buses increased 36.5 percent from a year earlier in December, had little impact on the market, as Japan's automakers skidded down with top-maker Toyota Motor Corp. losing 2.18 percent to 3,805 yen. Honda Motor Co. Ltd., who sells 45 percent of its vehicles in North America, dropped 0.79 percent to 3,145 yen and Nissan Motor Co. Ltd. closed down 1.60 percent at 803 yen. Mitsubishi Motors Corp. retreated 1.54 percent to 128 yen at the close on Tuesday. Capacitor maker Mitsumi Electric Co. Ltd. shed 0.12 percent to 1,656 yen and Sony Corp. lost 0.44 percent to 2,719. Toshiba Corp. also closed in negative territory, dropping 0.38 percent to 519 yen. "Profit-taking is weighing on the market as the Nikkei has gone way above its 25-day moving average and as the dollar/yen is now trading at 91 yen," said Fumiyuki Nakaniashi, manager at SMBC Friend Securities. Higher commodity prices boosted resource-based issues with oil and coal-related issues leading the market by percentage increase. Nippon Oil Corp. surged 7.39 percent to 465 yen and Nippon Mining Holdings Inc. jumped 7.25 percent to 429 yen. Mitsui Miningand Smelting Co. Ltd. added 0.82 percent to 245 yen and Mitsui Chemicals Inc. rose 4.56 percent to 252 yen. Monday's market leader by percentage increase, Japan Airlines Corp., continued its upward trend adding 2.3 percent to 90 yen as the struggling carrier begins to resolve its pension issues as a prerequisite to receiving further state-backed funding. Rival All Nippon Airways also closed up, advancing 0.38 percent to 266 yen. On the back of positive U.S. economic data, suggesting the world's leading economy is in a sustained state of recovery, positive investor sentiment towards Japanese issues is returning, analysts indicated. "Investors were relieved after the Institute for Supply Management's manufacturing activity index (was released)," said Yumi Nishimura, a senior equity market analyst at Daiwa Securities Capital Markets Co. "With U.S. economic indicators being upbeat, the market was expecting further weakening of the yen in the near future."

Source