Tokyo: The Nikkei average rose on Wednesday, extending gains after a big jump the day before as investors continue to cautiously take heart from Europe's efforts to resolve its sovereign debt problem.
Japan Tobacco, the world's third-biggest cigarette maker, saw active trade on news that the government may sell off its 50 per cent stake. Its shares soared to a three-year high before paring gains.
Japanese shares managed to rise despite the market losing support from dividend-related buying which had helped push the Nikkei almost three per cent higher the previous day.
Tuesday was the last day for investors to buy many Japanese stocks and still get dividends on them for the April-September first half.
"About half the shares on the Tokyo Stock Exchange went ex-dividend today, so there is some selling related to that, as well as uncertainty about how developments in Europe will proceed, and this is making buyers cautious and limiting the upside," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
The broader market managed to track Wall Street, which rose for a third day on Tuesday on efforts by euro-zone officials to bolster the region's rescue fund, the 440 billion euro ($600 billion) European Financial Stability Facility. .
But denials by policymakers that bailout cash would be increased frustrated some investors.
Plans under consideration call for leveraging the EFSF rather than increasing the size of the bailout fund, which would mean euro-zone countries would not have to increase their guarantees for the fund but the fund would be able to buy more debt than its cash would normally permit.
"Investors think, isn't the European situation better? But we have no way of knowing for sure at this point, and until they're more confident, we probably won't see major buying," said Hiroichi Nishi, equity division manager at SMBC Nikko Securities Inc.
The Nikkei was up 0.2 per cent at 8,625.40 by the midday break, still below its 25-day moving average of 8,729 but moving further away from its two-and-a-half year closing low hit on Monday.
The broader Topix index was up 0.5 per cent at 752.21.
Shares of Japan Tobacco were down 0.4 per cent at 365,500 yen as investors locked in gains following the share's earlier 8 per cent jump to its highest level since October 2008, after the ruling party policy chief said the government should sell off its entire stake to fund the reconstruction of areas of northeast Japan ravaged by the earthquake and tsunami.
Japan Tobacco was the heaviest-traded issue by turnover, with morning volume reaching one and a half times its 30-day full-day average.
Democratic Party policy chief Seiji Maehara also called for the sale of shares in energy companies held by the government, which include Inpex Corp and Japan Petroleum Exploration Co, to raise 700-800 billion yen.
Inpex rose 0.7 per cent to 481,000 yen and Japan Petroleum Exploration added 0.7 per cent to 2,842 yen.
Volume was moderate, with 773 million shares changing hands on the Tokyo Stock Exchange's main board, on track to fall below Tuesday's full-day volume of 1.9 billion shares and Monday's volume of 2.1 billion.
Advancing shares outnumbered decliners by 4 to 1. ($1 = 0.733 Euros)
Comments
0 comment