Japan Nikkei rises to seven-month high

Headline indices of the Japan share market advanced to seven month high on Friday, 14 September 2018, as investors took the opportunity to buy cheapened stocks amid an improvement in global sentiment. The gains were partly attributable to a decline in the yen against the dollar, spurred by the Turkish central bank's move Thursday to raise interest rates sharply to stabilize the plunging lira. A strong showing by U.S. stocks overnight helped lift Japanese equities as well. The 225-issue Nikkei Stock Average rose 1.2%, or 273.35 points, to 23,094.67. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 1.09%, or 18.59 points, to 1,728.61. The Nikkei gained 3.5% for the week, it's best weekly gain since the week ending July 13.

The Trump administration proposed a new round of trade talks with China, raising optimism of a detente in the ongoing trade dispute between the two countries.

Sentiment toward emerging market currencies was given a broad boost by the Turkish central bank's decision to raise its benchmark rate by a hefty 625 basis points to 24.0 percent on Thursday.

Shares of export-related companies were higher, with electronics stocks leading rally, as hopes grow for U.S.-China trade talks and with the yen hitting a six-week low of Y112.08. Fujifilm jumped 4.6% and Murata Manufacturing rose 5.3%. Semiconductor test equipment manufacturer Advantest advanced 5%.

CURRENCY NEWS: Japanese yen was softer against greenback and other major currencies on Friday, as investor demand for safe-haven currency dimmed on the back of an ebb in U.S.-China trade conflict concerns. However, the upside did not last for long, with the USD/yen pair dropping back to 111.70 (-0.11%) after the Japanese Prime Minister, Shinzo Abe said that it is not alright for monetary easing to continue forever. Around late evening Friday, USD/JPY was trading above 111.70. EUR/JPY was flat, and trading above 130.80. GBP/JPY was flat, and trading above 146.70.

Japanese government bond prices retreated across the board on Friday. A regular debt-purchasing operation by the Bank of Japan, however, helped limit JGB losses. The five-year JGB yield and the 10-year yield were both half a basis point higher at minus 0.07% and 0.11%, respectively. The 30-year yield also rose half a basis point, to 0.840%. The BOJ on Friday offered to buy 700 billion yen ($6.26 billion) of one- to five-year JGBs as part of its bond-buying scheme.

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