Japan's Nikkei average gained 1.8 per cent this morning to post its highest close in a month, with banks such as Mitsubishi UFJ Financial Group jumping amid easing fears about the health of US lenders.
The benchmark finished above the key 25-day moving average and brought this year's decline so far to 13 per cent. In recent weeks it has hovered above a 26-year low of
Pioneer Corp soared nearly 13 per cent after the Nikkei business daily said the restructuring electronics maker was in talks with Mitsubishi Electric and other firms on a possible tie-up in car navigation and other auto equipment operations.
Bank shares received added support after the Nikkei daily said the Bank of Japan was considering buying subordinated debt issued by banks to help bolster their capital, though market analysts said US news was still the key factor.
“Two of three major concerns in the market have become a bit brighter, with the risk of nationalisation of Citi and Bank of America receding and US retail sales turning out to be better than expected," said Takashi Kamiya, chief economist at T&D Asset Management.
“But what we are seeing is not the beginning of an upward trend, as uncertainty over GM's future still remains. This is merely a series of short-covering, not full-fledged buying by institutions such as pension funds.”
The benchmark Nikkei rose 134.87 points to 7,704.15, its highest finish since February 16th. The broader Topix climbed 2.4 per cent to 741.69.
Helped by a slew of upbeat news last week, the Nikkei gained 5.5 per cent on the week, its largest weekly jump since late November, while the US S&P marked its third-best week since World War Two.
Citigroup's Chairman Richard Parsons said late on Thursday that the bank did not need any more government aid, sending its shares up more than 6 per cent.
Bank of America Chief Executive Kenneth Lewis also echoed the heads of Citigroup and JPMorgan Chase & Co, who had said their banks were in the black for this year.
Some analysts said hopes for Japanese government economic measures also helped sustain gains in the market.
Reuters