Roundup: Nikkei gains 1 pct on local wage increases, eased concerns for early Fed rate hike

The Nikkei stock index gained 0.99 percent Tuesday as buying sentiment was lifted amid concerns the U. S. Federal Reserve may hike its key interest rate earlier than expected eased, the Bank of Japan maintained its ultra-loose policy, and wage increases at major firms here raised hopes for the economy.

The Nikkei 225 index added 190.94 points to close at 19,437.00, while the broader Topix index of all first-section issues gained 0. 79 percent, or 12.29 points, to finish at 1,570.50.

Local traders said the market closing at a near 15-year high was due initially from Wall Street's strong lead overnight, with U. S. shares gaining traction as concerns about the Fed hiking its interest rate abated for now.

Despite a meeting of the Fed's policy makers not concluding until Wednesday, market players here said that U.S. manufacturing output declining for a third straight month in February, showing that economic activity in the world's largest economy, lower than expected in Q1, would likely factor into the Fed's decision not to hike its interest rate at a juncture earlier than market expectations.

The latest data showed that factory production in the U.S. retreated 0.2 percent last month, compared to median economists' forecast of a 0.1-percent pickup and came on the heels of a 0.3- percent slip in January.

Investors also reacted well to news that, following bellwether firms like Toyota and Panasonic opting to raise their wages following negotiations and brightening the outlook for the economy on hopes for increased consumer spending, and Nissan announcing that it too planned to raise wages by an average of 5,000 yen per month, further fed into a risk-on mood Tuesday.

"Pay raises this year will be greater and more widespread than last year, which is positive for sentiment," said Yutaka Miura, a senior technical analyst at Mizuho Securities Co.

Earlier Tuesday and following a two-day policy meeting, Japan's central bank opted to stay pat on easing its monetary policy, with its chief Haruhiko Kuroda remaining confident that despite a global oil rut and falling prices for crude, the bank's deflation mission was still on track.

"An optimistic mood is spreading in developed markets. We continue to see a situation where risk money flows into Japan and Europe on the back of their monetary policies," said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co.

In currency markets, the U.S. dollar was changing hands at 121. 29 yen, edging down from 121.35 yen logged in New York on Monday.

But some exporters rallied on individual merit, with consumer electronics giant Sony leaping 4.3 percent to 3,235 yen. Sony announced after the closing bell that it had booked a Q3 operating profit of 90 billion yen, although was set to lose 170 billion yen for the year to March.

Top automaker Toyota accelerated 0.7 percent to close at 8,338 yen, after the firm announced wage hikes, but Nissan, despite following suit, closed down 0.1 percent at 1,283 yen.

Hitachi was a notable gainer, jumping 4.3 percent to 836 yen and Mitsubishi Heavy Industries was also in the spotlight as local reports of a share buyback plan lifted the stock by 1.8 percent to 691 yen.

Similarly, Tokyo Gas advanced 2.3 percent to 756 yen, marking its highest close in 25 years, following media reports of plans for significant share buyback scheme.

Trading volume on Tuesday fell to 1.94 billion shares on the Tokyo Exchange's First Section, down from Monday's volume of 1.97 billion shares, with advancing issues outnumbering declining ones by 1,024 to 679. Endi