Tokyo stocks close up 2.38pc

August 11, 2014 - 9:46:24 am

TOKYO: Tokyo stocks rallied on Monday, closing 2.38 percent higher as investors picked up bargains after geopolitical tensions pushed the Japanese market into a steep decline.

The benchmark Nikkei 225 index -- which lost 4.80 percent last week as Washington ordered air strikes on Iraq -- rose 352.15 points to finish at 15,130.52.

The Topix index of all first-section issues gained 1.97 percent, or 24.25 points, to 1,252.51.

The dollar's gains against the yen also helped boost the market.

"The dollar's recovery to the 102 yen mark is a critical factor to the bargain-buying we're seeing today," Investrust CEO Hiroyuki Fukunaga told Dow Jones Newswires.

"But more meaningful gains will depend on favourable reception of the government's economic growth plan and, of course, a sharp increase in the GPIF's (Government Pension Investment Fund) allocation to domestic stocks, which will almost certainly carry a positive 'fallout effect' on other investors," he added.

Japan's bond-heavy national pension fund -- the world's biggest -- is considering boosting its equity holdings as it searches for better returns, a move that could see huge flows of cash flooding into the stock market.

On Friday, the Nikkei dropped 2.98 percent to a two-month low after US President Barack Obama said that he had authorised air strikes on Iraq.

The announcement sent investors flocking to the safety of the yen, which is seen as a safe-haven currency during times of uncertainty and turmoil.

In forex markets, the dollar, which fell below the 102 yen level in Asia on Friday, was at 102.15 yen Monday afternoon, compared with 102.06 yen in New York late Friday.

A weak yen is good for Japanese exporters as it makes them more competitive overseas and inflates their repatriated profits.

In share trading, mobile carrier SoftBank rose 0.51 percent to 6,836.0 yen, despite saying Friday that its first-quarter profit dived nearly 70 percent from a year ago.

Nikon rose 1.39 percent to 1,455.5 yen after the camera maker plunged nearly 10 percent on Friday as its quarterly net profit dropped sharply from a year ago.

Tokyo also got a positive lead from Wall Street, which pushed higher Friday despite the air strikes in Iraq as investors ramped up buying in a market that some analysts said had been oversold.

The Dow Jones Industrial Average jumped 1.13 percent, while the broad-based S&P 500 gained 1.15 percent. (AFP)