Roundup: Tokyo stocks surge 3.2 pct following China interest rate cut

Tokyo stocks rebounded sharply Wednesday, with the Nikkei index leaping 3.2 percent and breaking a six-day losing streak following China cutting its interest rates to underpin its economy and boost investor confidence in the world 's second-largest economy.

The 225-issue Nikkei Stock Average gained 570.13 points from Tuesday to close at 18,376.83, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 46.32 points, or 3.23 percent, to end at 1,478.97.

Local traders said that stocks opened mixed at the beginning of the morning session, but reflected gains made on European bourses and particularly on other Asian indexes in the afternoon, including in Shanghai, as investor sentiment was boosted by relief brought by the People's Bank of China's decision to cut its interest rates and lower banks' minimum reserve requirements.

The People's Bank of China cut its key lending rate by 0.25 percentage points to 4.6 percent to calm stock markets after a two- day global rout, marking its fifth interest rate cut since November and the second in as many months.

Global share prices rose as a result, and European bourses were buoyed with markets in Britain, Germany and France all rising, although U.S. markets still remained pressured at their close despite efforts to bolster the country's economy.

"Stocks extended their gains sharply in the afternoon, helped by buoyancy in Shanghai and other Asian markets during the day," said Hiroaki Hiwada, strategist at Toyo Securities Co., who added, "Falls in global markets have fed each other, but that pattern seems to be starting to ebb, with investors now waiting to see if New York stocks will follow suit."

Other analysts pointed out that China, in making the double move, which also included lowering minimum reserve requirements, was committed to ensuring its economy remained supported.

"The Chinese central bank has belatedly made a move. One of the reasons behind the steep falls so far was the fact that the Chinese authorities hadn't done anything. The fact that they have now shows that they're determined not to let the economy worsen," Hiroichi Nishi, a manager at SMBC Nikko Securities, was quoted as saying.

A sense of market relief and consensus about very good timing was also mentioned by other market players, who also said U.S. stocks were now set to rally.

"A lack of positive policies from China was one reason markets had fallen, so now there's a sense of relief. Their timing was good," said Soichiro Monji, chief strategist at Daiwa SB Investments Ltd.

In currency markets, with the dollar changing hands at 119.77 yen, up from 118.84 yen logged in New York, major exporters were given a lift as they rely on a weaker yen to boost competitiveness and profits when they're repatriated on favorable exchange rates. Conversely, in times of market turmoil, investors flee from risky assets like stocks and buy into safe currency havens like the yen, which pushes up its price and batters exports.

However, with the decreased yen, top automaker Toyota jumped 2. 9 percent to 6,920 yen, while consumer electronics giant Sony leapt 4.5 percent to 2,963 yen.

Megabank Mitsubishi UFJ added 3.4 percent to 769 yen, while heavily weighted issue Fast Retailing, operator of the Uniqlo chain of apparel stores, rose by 5.5 percent to close the day at 50,620 yen.

China-linked issues also found favor Wednesday, with electronic component maker Murata Manufacturing surging 10.6 percent to 16, 955 yen, while TDK Corp. soaring 10.2 percent to 7,480 yen. Nitto Denko, for its part, producer of tapes, vinyl, LCDs, and insulation products, among others, climbed 9.3 percent to close the day at 8,105 yen.

But it was utility firms who led the day's gainers as a relatively safe haven, with Tokyo Electric Power shooting up 8.7 percent to 838 yen, while Kyushu Electric advancing 5.2 percent after announcing it will boost output at a nuclear plant. The plant is the first to be brought back online since the 2011 Fukushima nuclear disaster.

Insurance-related issues also lifted the market, on hopes of restructuring in the sector, following Nippon Life Insurance's announcement that it will buy Mitsui Life Insurance for around 400 billion yen (3.34 billion U.S. dollars). MS&AD Insurance Group Holdings, meanwhile, jumped 6.9 percent to 3,743 yen, while Sompo Japan Nipponkoa Holdings rose 6.4 percent to close the day at 3, 786 yen.

Trading volume on Wednesday dropped to 3.44 billion shares on the Tokyo Exchange's First Section, down from Tuesday's 4.74 billion shares, with advancing issues pummeling declining ones by 1,792 to 92. Endi