Japan's Nikkei stock average hit a ten-month closing high today, buoyed by high tech exporters such as Advantest Corporation after US data bolstered recovery hopes for the world's largest economy.
The benchmark Nikkei gained 0.2 per cent or 22.54 points to 10,375.01, its highest close since October 6th, after earlier rising as high as 10,479.19. The broader Topix rose 0.2 per cent to 959.02.
Much of the action was driven by earnings, with Astellas Pharma up after the drugmaker reported relatively firm April-June results thanks to solid sales of its mainstay drugs, while Suzuki Motor slid after posting an 80 per cent drop in quarterly operating profit.
But profit-taking eroded earlier gains in what analysts said was a natural reaction to rises that have seen the Nikkei climb more than 3 per cent in the last week.
"Given the strong overseas stock performances and good earnings in Japan, there's still some room for the Nikkei to rise, though we're seeing some people taking profits now," said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities.
"But there's no real change in investor appetite for risk, and no danger of the Nikkei slipping back below 10,000." Toyota Motor Corp reported its third straight quarterly loss after the close but lifted its bearish forecast to call for a smaller loss this year.
Analysts said that for markets to push higher, further strong signs of improvement in the global economy are needed.
"Certainly we've seen a lot of good earnings, but much of this is due to cost-cutting and various government incentives, and demand itself has yet to really recover," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"There's a slightly breathless sense to the gains at this point and we really need to see the US jobs data."
US stocks rose yesterday, pushing the S&P 500 index above 1,000 for the first time in nine months, after a key index of national factory activity beat analysts' forecasts and rose to the highest since August 2008.
Separately, a survey showed yesterday that global factory business activity stabilised in July as new orders and output recovered to levels not seen in well over a year.
The US economy is expected to have lost 320,000 nonfarm payroll jobs in July, a hefty number but still an improvement over last month's drop of 467,000. The unemployment rate is expected to rise to 9.6 per cent.
Reuters