The Japanese stock market is trading higher on Thursday with investors indulging in brisk buying at several counters, following the U.S. Federal Reserve's decision to extend "Operation Twist" and as the yen weakened against the dollar.
Operation Twist involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower.
Fed Chairman Ben Bernanke said that the move was one of the ways the central bank could boost the economy since the most traditional policy action, the lowering of interest rates, is essentially not available.
In late morning trades, the benchmark Nikkei 225 Index was gaining 98.84 points or 1.13 percent to 8,851.15, topping the 8,800 level for the first time in about a month on an intraday basis.
Among exporters, Canon Inc. is advancing 1.55 percent and Sony Corp is up 2.18 percent. Panasonic Corp, Kyocera Corp. and Toshiba Corp are gaining more than 3 percent each.
Among automakers, Honda Motor Co. is up more than 3 percent, while Toyota Motor Corp. is adding 0.98 percent and Suzuki Motor Corp. is adding 1.23 percent.
Nissan Motor Co. said it will trim domestic production capacity by 15 percent from July by suspending one of two production lines at its Oppama plant in Kanagawa prefecture, the Nikkei business daily reported Thursday. The company's stock is adding 1.47 percent.
Renesas Electronics Corp. shares gained more than 7 percent after the company's top three shareholders - Hitachi Ltd., NEC Corp. and Mitsubishi Electric Corp. - agreed on Wednesday to offer financial aid to the troubled chipmaker.
Olympus reportedly said it needs to quickly build its capital base through a tie-up with another company. The scandal-hit company's president Hiroyuki Sasa reportedly said the company needs an investment of 50 billion yen. The company's shares are adding 1.36 percent.
On the economic front, Japan residents bought a net 41.1 billion in foreign stocks in the week ended June 16, the Ministry of Finance said on Thursday. Japan investors also bought a net 70.8 billion in foreign bonds and notes last week, the ministry said.
Meanwhile, foreign investors purchased a net 58.5 billion in Japanese stocks last week and they also bought a net 412.6 billion in Japanese bonds and notes.
In the currency market, the U.S. dollar was trading in the mid-79 yen range on Thursday. In late morning trades, the dollar was trading in a range of 79.45-79.46 yen, up 0.61 yen from Wednesday's close of 78.84-78.85 yen in Tokyo.
On Wall Street, stocks saw considerable volatility over the course of the trading day on Wednesday as traders digested news of the Federal Reserve's decision to extend "Operation Twist." Nonetheless, the markets largely held on to their recent gains.
While the Nasdaq crept up 0.69 points or less than a tenth of a percent to 2,930.45, the Dow edged down 12.94 points or 0.1 percent to 12,824.39 and the S&P 500 slipped 2.29 points or 0.2 percent to 1,355.69.
The major European markets moved higher on Wednesday, ahead of the Fed's announcement. The DAX of Germany gained 0.45 percent and the FTSE 100 of the U.K. climbed by 0.64 percent. The CAC 40 of France rose by 0.28 percent, but the SMI of Switzerland declined by 0.27 percent.
U.S. crude oil futures ended sharply lower Wednesday, the lowest since early October 2011, mostly on demand growth concerns after an Energy Information Administration report showed U.S. crude oil stockpiles to have increased more than expected last week. Investors also weighed the Federal Reserve move to leave its interest rate unchanged and extend Operation Twist, citing a slowdown in jobs.
Crude for July delivery dropped $2.23 or 2.7 percent to close at $81.80 a barrel on the New York Mercantile Exchange.
by RTT Staff Writer
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