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Japanese shares rise on rate cut speculation
By SHINO YUASA,Associated Press Writer AP - Friday, December 19
TOKYO - Japanese shares rose Thursday on buying of financial stocks amid mounting speculation over the Bank of Japan's rate cut, but overall gains were modest with exporters under pressure on the back of a surging yen.
The benchmark Nikkei 225 stock average climbed 54.71 points, or 0.64 percent, to 8,667.23. The broader Topix index edged up 0.23 percent to 838.69.
"The Nikkei index held firm on gains in the financial sector as investors expected the Bank of Japan to cut its key interest rate" after a two-day policy meeting ending Friday, said Kazuhiro Takahashi, an equity strategist at Daiwa Securities SMBC Co. Ltd.
Speculation has grown that the Bank of Japan would cut its interest rate, now at 0.3 percent, after the U.S. Federal Reserve on Tuesday slashed its benchmark rate to a range between zero and 0.25 percent _ the lowest ever.
But the rate cut speculation alone failed to boost the Nikkei index as investors sold exporters in line with a surging yen, which has hit 13-year highs against the dollar.
The Japanese currency stood at 87.87 to the greenback in Tokyo Thursday afternoon, compared with 87.27 in New York late Wednesday. Earlier Wednesday it fell to 87.11 yen, its weakest level since July 1995.
"Worries over the strong yen continued to dampen sentiment as a spike in the Japanese currency really battered exporters' profits," Takahashi said.
A strong yen hurts Japan's exporters by eroding their dollar income from abroad. The country's major manufacturers like Toyota Motor Corp. and Sony Corp., which are also facing slowing demand overseas, have been cutting employees and slashing production.
Honda Motor Co.'s share fell 3.5 percent to 1,825 yen after it cut its annual profit forecast on Wednesday. Toyota fell 2.3 percent to 2,960 yen, but Nissan Motor Co. rose 0.7 percent to 304 yen.
Sony was down 0.5 percent at 1,815 yen, and electronics maker Panasonic Corp. also lost 0.5 percent to 1,021 yen.
Mizuho Financial Group Inc. jumped 8.1 percent to 256,800 yen, and Sumitomo Mitsui Financial Group Inc., one of Japan's top three banks, gained 8.5 percent to 384,000 yen. Japan's top brokerage, Nomura Holdings Inc., rose 4.1 percent to 665 yen.
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