Japan's Nikkei stock average climbed 2 percent, its biggest one-day gain in two weeks, as healthy risk appetite lifted shares around Asia and helped banking stocks rebound after a recent slide. High-tech glass maker Hoya Corp climbed after the Nikkei business daily said the company appeared to be targeting an operating profit of 50 billion to 55 billion yen, close to its operating profit of 59 billion yen a year earlier.
Beer maker Kirin Holdings, which is in talks to take over rival Suntory Holdings, rose 1.2 percent to 1,369 yen after Suntory said it was in talks to buy soft drinks maker Orangina from its private equity owners.
While gains were likely to be capped by the yen's advance against the dollar, the impact of this will be moderated because the underlying issue is the dollar's weakness rather than the yen's strength, analysts said. The dollar index, which tracks its performance against a basket of six major currencies, edged down 0.2 percent after dipping to 76.803 on Wednesday, its lowest level in almost a year.
"Certainly the currency issue is a concern," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
"But I think the Nikkei now is rising in an effort to play catch-up after falling behind other major stock indexes in their recent rises."
Shares rose across Asia, with the MSCI index of Asia Pacific stocks outside Japan gaining 1.5 percent.
Such broad gains in Asia and elsewhere after Wall Street rose for 4 straight days point to an improvement in investor risk appetite that bodes well for Japanese shares, said Nagayuki Yamagishi, an investment strategist for Mitsubishi UFJ Securities.
"There is a possibility that international portfolios might be re-jigging allocations amid an improvement in risk appetite," he said, noting this could benefit markets where international investors are underweight, such as Japan and Britaing.
The benchmark Nikkei rose 201.53 points to 10,513.67, managing to close above 10,400, the level of its 25-day moving average, which many in the market had said had become resistance and was standing in the way of further rises. "Now that we've held onto this level long enough to close above it, the recent brief correction may be over," said Ichiyoshi's Akino, referring to the Nikkei's 3.3 percent fall last week.
The broader Topix closed up 2 percent at 958.49.
WAIT AND SEE
Though trade was active, energy was low until the last 30 minutes as investors turned their eyes to the performance of Wall Street, Friday's expiration of Nikkei futures and options, and a slew of economic indicators due out from China on Friday.
"There are a lot of expectations on the Chinese data, and also the possibility of some negative surprises. The uncertainty is making it hard for investors," said Yumi Nishimura, deputy general manager of the investment advisory division at Daiwa Securities SMBC.
Among the indicators due out are August industrial output and retail sales.
Others said that activity is likely to be muted for the next few weeks as investors hunker down and wait for first half corporate earnings, which will start coming out next month, amid concerns about the pace of the global economic recovery.
"A rapid recovery in the economy is likely to end. While growth will remain positive, the pace of change will probably slow," said Hideyuki Ishiguro, supervisor at the investment strategy division of Okasan Securities.
Banking shares rose, trimming some of the losses made since the start of the month, with the banking sub-index climbing 3.3 percent to become the biggest gainer among the sub-indexes.
Mitsubishi UFJ Financial Group rose 4.4 percent to 550 yen and Mizuho Financial Group gained 2 percent to 204 yen. Sumitomo Mitsui Financial Group rose 3.6 percent to 3,740 yen.
Global moves toward stricter bank capital requirements have stirred concerns about the potential for capital-raising by financial institutions, weighing on banking shares recently, as has a brokerage downgrade of the sector.
Under new rules proposed by top central bankers and regulators earlier this month, banks will have to raise the quality of their top-tier capital buffers, which must be mainly common shares and retained earnings, and disclose their make-up.
Fujifilm Holdings Corp rose 3.3 percent to 2,815 yen after the Nikkei business daily said a Fujifilm unit has developed technology that will increase the sensitivity of rapid testing devices for influenza viruses by 100 times.
Trade picked up, with 2 billion shares changing hands on the Tokyo exchange's first section compared to last week's daily average of 1.9 billion.
Advancing shares outnumbered declining ones by more than 6 to 1.
