Nikkei rises, on track for longest winning run since May 23 selloff

Disappointment over a growth strategy unveiled by the Japanese government recently has contributed to the market tumult

Japan's Nikkei rose on Tuesday, heading for a third straight day of gains, which will mark its longest winning run since a sharp selloff on May 23, underpinned by hopes the Federal Reserve will reinforce its commitment to support the US economy.

 

Sony Corp climbed 3.6 % after New York-based hedge fund company Third Point said it had raised its stake in the Japanese firm and asked for an opportunity to present its proposal for a partial spin-off of Sony's entertainment unit to the board.

 

It was the most traded stock on the main board by turnover.

 

The Nikkei advanced 0.6% to 13,107.03, breaking above the bottom of the Ichimoku cloud in a bullish sign. It climbed 2.7% on Monday, lifting the index out of bear market territory.

 

"The yen move is obviously driving the yen-sensitives higher from their low positions ... It's a nice pick-up in volume versus yesterday but nothing really fundamental," a senior trader at a foreign brokerage said.

 

The yen was last traded at 94.79 yen to the dollar on Tuesday, down from the previous session's high of 94.08, giving exporters some support.

 

Toyota Motor Corp  put on 1.6 % and was the second-most traded, while Subaru maker Fuji Heavy Industries  added 1.9 % and Mazda Motor  gained 1.4 %.

 

The broader Topix index gained 0.6 % to 1,091.18, ahead of a two-day Fed meeting that will begin on Tuesday.

 

Many investors have been cutting their long Japanese equities and short yen positions on concerns that the Fed will scale back its stimulus and after the Nikkei had rallied more than 80 % from mid-November to its 5-1/2 year peak hit on May 23. Since then, trading in Japanese equities has been extremely volatile.

 

Disappointment over a growth strategy unveiled by the Japanese government recently and worries over slowing growth in China have also contributed to the market tumult.

 

Underscoring the volatility, since May 23 the Nikkei has had 15 sessions where intraday swings exceeded 2.5 %, compared with 16 such trading days for the year up to May 22 and four such days in the whole of 2012. The US S&P 500 only has had one such trading day in 2013, and the Euro STOXX 50 index has 11.

 

The benchmark Nikkei has fallen 17.6% since that mulityear high on May 23, but is still up 6 % since April 4, when the Bank of Japan unveiled sweeping stimulus measures and has risen 26 % this year.