Roundup: Nikkei gains 1.25 pct as fears abate about Fed rate hike, weak yen adds support

The Nikkei stock index gained 1.25 percent Tuesday as investor sentiment was lifted by Wall Street's overnight rally which was triggered by abating fears about the U.S. Federal Reserve raising its interest rate at an early juncture.

The Nikkei 225 stock average added 242.56 points to close at 19, 640.54, while the broader Topix index of all first-section issues gained 1.14 percent, or 17.84 points, to end at 1,578.55.

Traders here said that despite the U.S. Labor Department's report showing that employers added just 126,000 nonfarm workers in March, the lowest in more than a year, signaling a possible slowdown in the growth of the world's largest economy, U.S. markets actually cheered the data as it meant the Fed would likely continue to maintain its accommodative policy.

"A delay in U.S. interest rate hikes means extremely easy monetary conditions continue and this is being taken as a plus by the stock market. Investors were shifting toward an expected rate hike in June, but now we're seeing them rebuilding positions," said Hajime Sakai, a portfolio manager at Mito Securities Co.

Local investors turned their attention to the Bank of Japan's ( BOJ) policy board meeting scheduled to conclude Wednesday with a statement by its chief Haruhiko Kuroda. While the general consensus is that the central bank will keep its policy unchanged, speculation is rife that it may downwardly revise its economic outlook, due to February's inflation data coming in flat, owing to a slump in oil prices and a drop in corporate investment.

Nevertheless, Wall Street's uptick overnight saw the U.S. dollar rise to 119.56 yen in afternoon trade, from 119.52 yen logged in New York. A weaker yen is always a boon for exporters and the broader market, as their competitiveness is boosted in overseas markets when the currency is weak, and overseas profits are augmented.

As such, top automaker Toyota accelerated 0.92 percent to close at 8,410 yen, while smaller rival Honda advanced 0.26 percent to finish at 4,046 yen. Nissan Motor, for its part, also parked in positive territory at the close on Tuesday, gaining 1.2 percent to 1,223 yen.

Panasonic added 1.1 percent to 1,593 yen and optics and reprography product maker Olympus leapt 2 percent to 4,325 yen, following reports it will market more of its medical equipment in China.

Domestic oil and energy-related shares gained Tuesday, following crude prices soaring Monday after Saudi Arabia hiked its prices for oil exports to Asia, and oil exploration giant Inpex soared 4.4 percent to 1,386 yen, while Japan Petroleum Exploration Co. jumped 5.1 percent to 4,245 yen. Japan Drilling, meanwhile, rose 3.3 percent to close at 4,085 yen.

Osaka-based Ono Pharmaceutical gained 1.8 percent to 13,420 yen, after SMBC Nikko lifted its rating on the firm's stock from " neutral" to "outperform."

But Asics, an athletic equipment maker known particularly for its sports shoes, slumped 1.8 percent to 3,215 yen, following a rating downgrade from Credit Suisse to "neutral" from "outperform. "

IHI, a heavy machinery maker, was another notable decliner Tuesday, relinquishing 0.4 percent to 524 yen, having dropped 1.7 percent in morning trade, after the maker of ships, aero-engines, turbochargers and industrial machines, said it booked 9 billion yen (75 million U.S. dollars) in special losses last fiscal year, due to its loss making Brazil-based subsidiary.

Trading volume rose from Monday's year-low of 1.59 billion shares, to 2.09 billion shares Tuesday, on the Tokyo Exchange's First Section, with advancing issues outnumbering declining ones by 1,290 to 480. Endi