Nikkei gains on Toyota output recovery

earlier than expected but a cut to Greece’s debt rating pushed the yen higher and weighed on sentiment.
Trade was thin with many participants keeping to the sidelines ahead of more corporate earnings from major companies this week, including bellwether Toyota and electronics conglomerate Hitachi Ltd, which report on Wednesday.
Japanese manufacturers are still struggling to deal with big disruptions to parts supplies after the March 11 earthquake and tsunami and the Nikkei newspaper report about Toyota provided a boost to the benchmark although some of those gains were pared in late trade.
“Investors are very sensitive to news about recovery. The report about Toyota will help them to focus on the future – they will probably think Japanese companies will recover and that it is going to happen sooner rather than later,” said Makoto Kikuchi, chief executive officer at Myojo Asset Management.
After the bell, Toyota said it still expected production levels to normalise by November or December but added that it was aiming to return production to pre-quake levels as soon as possible. The benchmark Nikkei average closed up 0,3 percent at 9 818,76.
Immediate resistance looms at the benchmark’s 200-day moving average, now at 9 822. The broader Topix gained 0,4 percent to 856,46.
Japanese shares are down some 6 percent since the March 11 quake, while Asian stocks outside Japan have gained more than 7 percent in the last two months.
Toyota shares jumped 1,7 percent to 3,250 yen after the report and were the second most actively traded by turnover on the Tokyo stock exchange’s main board.
Standard and Poor’s cut Greece’s rating to B from BB-, dragging it further into junk territory on concerns a debt restructuring is increasingly likely. Moody’s threatened to cut the country’s ratings by several notches.
“The impact from Greece’s downgrade is not that big, but it is not helping investor appetite,” said Fujio Ando, senior managing director at Chibagin Asset Management.
“If companies like Toyota do not release forecasts for this financial year, resistance for the Nikkei may hold firm around 9 900 until there are more signs of a recovery in earnings later this year.”
Toshiba Corp surged 3,7 percent to 451 yen inactive trade after Japan’s biggest chipmaker said it expected its operating profit to rise by 25 percent in the year to March 2012, roughly in line with market expectations, although it warned that potential power outages could jeopardise that outlook.
Chubu Electric recouped some big losses made the previous day, adding 1,9 percent to 1,614 yen, after it agreed to shut down its nuclear plant until it can be better defended against the type of massive tsunami that in March triggered the world’s worst atomic crisis in 25 years.
Chubu shares tumbled 10 percent on Monday, but market players said retail investors encouraged by the stock’s high dividend yield covered some of their short positions yesterday.
Shares in Japanese shipbuilder Sumitomo Heavy Industries surged 11,8 percent to 597 yen after the company said it expected its annual operating profit to increase 18 percent to 54 billion yen (US$673 million) and after Goldman Sachs hiked its target price for the stock to 680 yen from 650 yen.
Sumitomo Heavy’s stock prior to this week was trading at a multiple of 12-month forward EPS that was 37 percent below the average of its industry peers, Thomson Reuters StarMine showed.
The report about Toyota boosted trading volume to 1,9 billion shares on the Tokyo stock exchange’s main board – up from 1,7 billion on Monday. – Reuters.