* Nikkei up 0.3 pct, ending three-session losing run
* China PMI data lifts index
* Automakers lifted by BOJ tankan
* NGK Insulators sheds 11 pct
By Mari Saito and Dominic Lau
TOKYO, April 2 (Reuters) – Japan’s Nikkei average snapped a
three-day losing streak on Monday after stronger-than-expected
data from China eased worries of an abrupt economic slowdown,
while buying by domestic investors provided support.
Blue-chip shares were in demand, after a pullback last week,
with Japan’s No.1 investment bank Nomura Holdings up
2.5 percent and China-reliant industrial robot maker Fanuc Corp
gaining 2 percent.
The Nikkei closed 0.3 percent higher at 10,109.87
after losing 1.7 percent in the previous three sessions.
Fujio Ando, senior managing director at Chibagin Asset
Management, said domestic investors were stepping in to buy
equities as Monday marked the first trading day of the new
financial year.
“Investors are buying off the bat … I think they’re
shrugging off economic concerns over Europe and China and
concentrating on companies that are expected to benefit from
Japan’s reconstruction, while production by exporters is also
recovering from last year’s disasters,” Ando said.
The softer yen provided support, with the dollar traded at
83.030 yen, steadying during Asian trading hours after
hitting a three-week trough of 81.82 on Friday.
“The only factor that is affecting market strength today is
this Chinese PMI data and domestic institutional
start-of-the-year buying, that’s it,” said Stefan Worrall,
director of equity cash sales at Credit Suisse in Tokyo.
China’s official purchasing managers’ index unexpectedly
jumped to an 11-month high of 53.1 in March, up from February’s
51 and comfortably ahead of forecasts at 50.5, easing recent
concern over a “hard landing” for the world’s second-largest
economy.
A dealer at a foreign bank said he was seeing a mixed of
domestic and foreign investors buying.
“We are still waiting for the foreign investors to come in
big time. It hasn’t really happened so far. If you see that
happens, you will probably see the Nikkei at 11,000 or 12,000,”
Foreign buying “activity is picking up slightly but still
not much from long-only investors.”
Deutsche Bank said in a note that it estimated foreign
investors’ remaining buying capacity was 1.2 trillion yen
($14.58 billion), assuming they would buy back net sales made
since last July, although the Nikkei’s momentum slowed after
breaking the 10,000-mark on March 14.
Credit Suisse strategists were upbeat, upgrading Japan to
“tactically overweight” for the next few months and suggesting
Japan should outperform by another 12 percent.
They recommended investors to buy stocks with large U.S.
exposure, such as Toyota Motor Corp and electronics
firm Kyocera Corp, or names that dominate their end
markets, like Fanuc and synthetic rubber maker JSR Corp
.
The broader Topix index added 0.2 percent to 856.05
on Monday. About 2.16 billion shares changed hands, up from 1.89
billion on Friday and an average of 1.98 billion last week.
TANKAN
Providing some cause for caution was the Bank of Japan’s
tankan, which showed major manufacturing sentiment was unchanged
in the first quarter, a sign manufacturers remained worried
about the yen’s strength.
The headline index for business sentiment was minus 4 in
March, lower than the median market forecast for minus 1.
Market participants said the bearish tankan was a signal
that many big manufacturers may provide conservative earnings
guidance for the coming fiscal year, leading some overseas
investors to question their bullish allocation in Tokyo stocks.
“The tankan was unexpectedly cautious … as we go into an
earnings-driven market, I do think the forex rate is not enough
to push the index to pre-quake levels near 10,400. For that,
we’ll need to see U.S. earnings and more details of corporate
outlooks,” said Masayuki Doshida, senior market analyst at
Rakuten Securities.
Automakers received a boost from the BOJ survey, however,
which showed the sentiment index for big car makers at plus 28,
improving for a third straight quarter, lifted by the waning
impact of last year’s floods in Thailand and the government’s
subsidies for fuel-efficient car purchases.
Honda Motor Co Ltd and Nissan Motor Co Ltd
and rose between 2.1 and 1.9 percent respectively.
Bucking the trend was NGK Insulators Ltd, which
shed 8.8 percent after the maker of insulators for power
utilities said it would have difficulty supplying NAS batteries
— used for storing power at utilities — to Tohoku Electric
Power Co Inc this summer.
