TOKYO: The Nikkei stock average climbed 1 percent on short-covering on Wednesday, up for a third straight session after Greece's government survived a confidence vote crucial to avoiding default but it faces strong resistance around 9,600.
The Greece vote had an immediate impact with the euro making short-term gains, although concerns about the implementation of austerity measures stopped investors from piling more aggressively into riskier assets. Players were also cautious ahead of the outcome of the Federal Reserve policy meeting.
Asian and European investors placed basket buy orders for 25 billion yen but the upper limit set by the Asian buyer at 9,600 set a ceiling for the Nikkei's rise, traders said.
The 9,600 line is seen as strong resistance because the benchmark index failed to decisively breach the level on three occasions in June and as its 13-week moving average is near that
the level. " The market is up on Greece, but it's a temporary rise on a news event. We may see some more short-covering going into the afternoon, but that's about it -- fundamentals haven't changed a notch," said Mitsushige Akino , chief fund manager for Ichiyoshi Investment Management.
By the midday break the benchmark Nikkei share average rose 1.3 percent in thin volume to 9,582.73, posting the biggest daily jump in more than three weeks, while the broader Topix climbed 1 percent to 824.01.
WEAK VOLUMES Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities said arbitrage trading was another factor behind the Nikkei's advance.
"If you look at Softbank, Fast Retailing, Advantest -- all stocks that due to their heavy weighting can lift the Nikkei higher -- they're all up as players want the market to go up," he said.
Softbank Corp was up 2.9 percent at 2,943 yen while Advantest Corp gained 2.4 percent to 1,454 yen. Softbank has the third-heaviest weighting in the Nikkei index with 3.6 percent, Thomson Reuters data showed, while Advantest has a 1.2 percent weighting.
Laggard financial shares were among the biggest gainers, tracking U.S. rivals which had gained on hopes that the passing of Greece's confidence vote could help remove a source of constant worry about global banks' exposure to euro zone debt problems.
The banking sector pierced above its 25-day moving average to reach a one-week high at 107.5 yen, led by Japan's biggest bank by assets, Mitsubishi UFJ Financial Group which rose 1.9 percent to 369 yen in active trade.
Ahead of the Fed meeting results, only 860 million shares changed hands on the Tokyo stock exchange's main board by the midday break, suggesting the day's total will likely come in below last week's daily average of 1.82 billion shares.
The Federal Open Market Committee's two-day meeting is due to end on Wednesday, the first since U.S. economic data started to take on a decisively weaker tone around a month ago.
The Fed is expected to cut its growth forecast for 2011, but Federal Reserve Chairman Ben Bernanke probably will continue to argue the slowdown is temporary.
The Nikkei has lost 8.1 percent since March 10, the day before a massive earthquake and tsunami ravaged Japan's northeast coast while Asian stocks outside Japan have eked out a 1.8 percent gain over the same period.
source-Times of India
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