Nikkei Jumps 10% on Soft Yen, BOJ Rate Cut Talk

Japan's Nikkei Average surged 10 percent on Thursday to post its highest close in over a week, buoyed by exporters such as Kyocera on a softer yen and amid talk of a rate cut by the Bank of Japan after similar moves by the United States and China.

Mitsubishi Corp and other trading houses shot up on a combination of bargain-hunting and a surge in commodity prices that also boosted firms such as shippers. Oil rose towards $70 a barrel on Thursday, building on its more than 7 percent surge in the previous session.

"Expectations for the Bank of Japan to cut interest rates mounted after the U.S. cut rates as expected and it'll almost certainly do that again," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"But if I have to wrap things up in one word, it's still a rebound. The question is how far the rebound can take the market, and that'll be difficult as the economy won't improve overnight and currency markets are still unstable."

The Federal Reserve cut U.S. interest rates by a half-percentage point on Wednesday to try to stave off a prolonged recession and left the door open to further reductions if needed. Norway and China also made cuts.

Expectations grew that Japan's central bank would also cut its already rock-bottom interest rates for the first time in seven years when its policy board meets on Friday.

The Nikkei 225 Average climbed 817.86 points, or 10 percent, to end at 9,029.76, the highest close since Oct. 22. Still, the Nikkei has lost 42 percent so far this year. The broader Topix shot up 8.3 percent to 899.37.

The yen fell broadly. The dollar rose 1.6 percent to 99.00 yen, staying well above a 13-year trough of 90.87 yen hit on trading platform EBS late last week.

After the market close, Prime Minister Taro Aso is set to unveil Japan's second economic package in two months, and some in the market said expectations for a Bank of Japan rate cut and the economic package gave investors fresh hope. But others remained skeptical.

"There's no question that this kind of step needs to be done, not only in Japan but around the world, but there are strong doubts about how effective Japan's package will be," said Yamagishi at Mitsubishi UFJ Securities.
     
Traders, Exporters, Ships

Electronics parts maker Kyocera surged 9.2 percent, while Canon jumped 11 percent. Honda Motor soared 13 percent and Toyota Motor climbed 11.4 percent.

Toyota said on Thursday that U.S. automaker General Motors has not asked Toyota for help in turning around its business, denying a Kyodo news agency report.

Trading firms surged after base metals climbed on Wednesday, with a rise in crude oil prices also providing upward impetus.

Shares of Mitsubishi powered higher by 8.2 percent, while Mitsui & Co climbed 12 percent.

Shippers, battered until recently, saw benefits from the wave of buying, with the sea transport subindex rising 15.3 percent to become the top gainer among the subindexes.

Kawasaki Kisen surged 19.8 percent to 423 yen and Mitsui O.S.K. Lines added 17.7 percent to 525 yen. Nippon Yusen, Japan's largest shipper, gained 11.3 percent to 504 yen.

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