Nikkei increased by 0.5 percent on Wednesday after failing nearly two percent the previous day when a liquidity squeeze hit Chinese shares.
Last month, Nikkei soared by eight percent. Analysts said that recent yen weakness and forecasts of a further recovery in the US economy will continue to lend support despite downward pressure pushing Japanese shares on speculation that European debt crisis will go beyond borders.
Fumiyuki Takahashi, equity strategist for Barclays Capital Japan, said that the investors are anxious over interest hikes in China, the European debt contagion, the US employment figures and the Christmas sales figures to trade on. He said that the investors want to watch the market a bit closer surrounded by these issues. However, the long-term view is rather positive with high expectations for Japanese companies to do well this year.
Trade was light in Tokyo early Wednesday with 1.71 billion shares changing hands, which is considered the lowest volume for this week. The Nikkei traded with an increase of 51.01 points at 9,988.05, which is above support at the two hundred-day moving average, now at 9,911.59. Meanwhile, the broader Topix index climbed 0.6 percent to 866.07 on Wednesday.
On the other hand, Honda shares rose 2.3 percent to 3,080 yen, while Kyocera fell 1.6 percent at 8,400 yen. One trader cited buying of auto-related stocks by overseas investors. Toyota Motor stocks climbed 2.8 percent at 3,310 yen. Previously, the company said that it filed a lawsuit against the Motors Liquidation, the company responsible for the discarded assets of the former General Motors. Toyota seeks for damages related to the closure of their joint factory, the New United Motor Manufacturing.
