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TOKYO, Nov 29 AFP

November 29 2012, 6:55PM

Tokyo stocks have added 0.99 per cent as investors eye signs of progress in the United States on avoiding the fiscal cliff, while a weaker yen also provided support.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange on Thursday rose 92.53 points to 9,400.88, while the broader Topix index of all first-section shares added 1.04 per cent, or 8.05 points, to 779.44.

Investors kept a close eye on progress in a Washington budgetary impasse which has seen a deeply divided US congress negotiate over the package of automatic spending cuts and tax hikes known as the fiscal cliff, slated to come into effect on January 1 unless a new spending deal is reached.

The current package threatens to drag the US into recession, dealing a huge blow to the wobbly global economy.

However, investors have taken positive comments from US lawmakers as a sign a deal was in sight, dealers said.

"Expectations are growing that negotiations will move forward," Yoshihiro Okumura, general manager of research at Chibagin Asset Management, told Dow Jones Newswires.

Profit taking capped further gains in Tokyo, added Hiroichi Nishi, general manager of the equity division at SMBC Nikko Securities.

"The focus is now on whether the US 'fiscal cliff' can be transformed to 'a gentle slope'," he told Dow Jones Newswires.

Shares in Japanese exporters got a boost from a weakening yen, which has been weighed by comments from Japan's main opposition leader Shinzo Abe.

Abe, widely tipped to become the nation's next prime minister after December elections, has repeatedly vowed to pressure the Bank of Japan into more aggressive monetary easing to boost the world's third-largest economy.

In afternoon forex trade, the dollar gained on the Japanese unit at Y82.09, up from Y82.03 in New York late on Wednesday, while the euro fetched Y106.24, from Y106.14 in US trade.

The euro bought $US1.2941 from $US1.2939.

In stock trading, Canon rose 1.13 per cent to Y2,849, Toyota added 1.15 per cent to Y3,515 and conglomerate Mitsubishi ended up 1.55 per cent at Y1,566.

Sharp gained 3.04 per cent to Y169 after a report that the struggling electronics giant was talking with US technology firms, including Dell and Intel, for a capital injection.

Sony ended flat at Y803 after initially slipping on another report in the Nikkei business daily that the electronics giant was eyeing the sale of its battery business to shore up a troubled balance sheet.