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Nikkei Logs Best Weekly Gain in 7 Months

Asian stocks trekked higher on Friday after a fall in U.S. jobless claims and solid sales reports by large retailers lifted Wall Street for a third straight day.

On Thursday, U.S. stocks rose about 1 percent after apparel retailers such as Abercrombie & Fitch and department store chains such as JC Penney topped expectations in their June sales.

Adding to the upbeat mood, initial claims for state unemployment benefits fell 21,000 to a seasonally adjusted 454,000 in the week ended July 3, the lowest level since early May, the Labor Department said.

Japan's Nikkei average booked its best weekly rise in seven months and market players said more gains may be in store after it moved away from a seven-month low and held above a key retracement support.

But Sunday's Upper House election has created a sense of uncertainty this session, with Japanese newspapers reporting that it would likely be rough ride for ruling Democratic Party of Japan (DPJ).

The benchmark Nikkei added 0.5 percent to 9,585.32. For the week, the index rose 4.1 percent, its best weekly performance since December, as pessimism about the outlook for the global economy subsided.

The broader Topix finished flat at 861.21 points this session.

Fast Retailing reversed course to close 0.6 percent higher. Its shares fell earlier after the Japanese retailer on Thursday cut its annual forecast for the first time in three years, citing reduced sales at its hugely popular Uniqlo clothing chain stores.

Shares of Inpex plummeted 12.8 percent after falling earlier on news Japan's top oil and gas explorer said it would raise up to $6.7 billion via a global share offering to finance its giant Ichthys gas project in Australia.

The share sale, the biggest equity financing deal among non-financial companies in Japan this year, would dilute the value of Inpex's existing shares by more than 50 percent.

But shares of exporters drew support from a softer yen, as the euro climbed near a two-week high against the yen at around 112.30 yen.

Sony rose 0.8 percent to 2,442 yen and TDK Corp gained 1 percent to 5,070 yen.

Canon advanced 1.2 percent to 3,485 yen after the Nikkei business daily reported it is likely to post a near three-fold jump in its group operating profit for the January-June period, boosted by better-than-expected sales of digital single-lens reflex cameras and laser printers.

Seoul shares gained sharply on Friday, as signs that the South Korean economy was on track for a firm recovery boosted exporters and financials.

In a surprise move, the Bank of Korea raised interest rates by 25 basis points to 2.25 percent from a record low, the first hike since the outbreak of the financial crisis. The move was seen as a reflection of confidence about the country's growth prospects.

The Korea Composite Stock Price Index (KOSPI) finished up 1.43 percent at 1,723.01 points, just 2 percent away from its earlier 2010 high of 1,757.76 points.

Financials bounced as the rate hike strengthened hopes banks may see higher net interest rate margins, analysts said. Hana Financial rose 4.4 percent and Woori Finance gained 4.1 percent.

Blue chips also outperformed as expectations for the impending second quarter earnings season mounted. Hyundai Motor, the country's leading automaker, jumped 3.35 percent.

CCTV maker Samsung Techwin rose 4 percent as it was widely expected to post strong quarterly figures.

But shipping issues suffered after a 3.9 percent loss in the Baltic Dry Index, which tracks the cost of shipping key commodities. STX Pan Ocean retreated 0.8 percent and Hanjin
Shipping
declined 1.3 percent.

Australian shares closed 0.9 percent higher and posted their first weekly gain in three as
positive U.S. data, forecasts for global growth and strong metal prices improved sentiment.

But low volumes showed caution still prevailed as investors look for sustained recovery cues that will steer the global economy from the double-dip threat.

The S&P/ASX 200 climbed 39.5 points to 4,396.30. The benchmark index rose 2.4 percent on Thursday, its biggest one-day gain in two months.

Energy firm Santos advanced 9.7 percent to A$14, its highest close in 2 ½ months following a newspaper report that it is close to inking a deal with Royal Dutch Shell to sell an equity stake in its Gladstone LNG project.

Shares in Gloucester Coal were flat after it said it was in talks with its majority shareholder, Noble Group, on acquiring some of Noble's Australian coal assets. Shares of Singapore-listed Noble rose 2.1 percent.

Building materials group Boral fell 2.7 percent, adding to the steep fall on Thursday, after a discounted A$490 million ($423 million) rights issue.

The Hong Kong market tracked Wall Street higher, with the benchmark Hang Seng Index rising 1.6 percent to 20,377.48 points .

China-related banking and property stocks propelled the market higher. Bank of China climbed 1.7 percent and Bank of Communications jumped 2.9 percent.

Among property plays, China Resources Land surged 4.1 percent and China Overseas Land and Investment advanced 3.3 percent.

Consumer goods exporter Li & Fung rose 6.2 percent, their biggest jump since January, after the company said it signed three acquisition deals expected to bring in more than $1 billion in revenue in 2011.

Other consumer stocks also gained, with Europe-focused retailer Esprit Holdings up 2.6 percent while China's Lianhua Supermarket was 2.8 percent higher.

Shares of Cnooc rose for second straight day on continued rebound in oil prices, up 0.9 percent at HK$12.98.

With books closing on Agricultural Bank of China's mammoth initial public offering, the focus is shifting to its trading debut next week, which will coincide with China's GDP data and JP Morgan Chase'squarterly earnings report in the United States on Thursday.

China's second-quarter GDP is likely to show moderating growth although expansion could still be in the double digits, prompting investors who have remained on the sidelines to put
money back into Chinese shares.

China's key stock index closed 2.3 percent higher as cash tied up by Agricultural Bank of China's mega IPO returned to the market, while institutions bought up banks and property issues.

Dealers attributed the buying of blue chip stocks to window-dressing ahead of the listing of AgBank next week.

The stock market has been plagued with liquidity problems due to a flood of issuances including AgBank's IPO, a squeeze in money markets and more recently an influx of bank rights issues.

The Shanghai Composite Indexclosed at 2,471 points, winding up the week with a gain of 3.7 percent and reversing a 6.7 percent loss last week amid the peak of fund demand for AgBank's stock initial public offering.

Property stocks outperformed, with Shanghai's property sub-index up 2.7 percent while top developer Gemdale, the most active stock, rose 3.3 percent.

Taiwan's stock market climbed 0.5 percent, with UMC rising on strong June sales. Sentiment was also supported by an IMF upgrade to its 2010 global economic growth forecast for Taiwan.

The main TAIEX share index closed up 38.4 points at 7,647.25. The index was up about 4 percent this week.

Shares of United Microelectronics Corp (UMC), the world's No.2 contract chipmaker, rose 1 percent after posting its biggest monthly sales in nearly three years in June.

Bigger rival TSMC ended flat. It posted record monthly sales in June after the Taipei stock market closed.

In Southeast Asia, Singapore's Straits Times Index and Malaysia's KLCI rose 0.7 percent in afternoon trade.

Shares of Singapore-listed shipbuilder Yangzijiang Shipbuilding advanced 2.9 percent to over a two-month high on expectations it will report strong earnings for the second quarter and be on the lookout for acquisitions.

A local trader said the market is also picking up shipbuilding stocks ahead of the half-year earnings reporting season as investors expect strong results.

Shares of another shipbuilder Cosco gained 2 percent to S$1.52, with over 8.8 million shares traded.