By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks jumped Friday to
stage a modest recovery, with relief buying emerging after the
extreme losses they suffered the previous day, amid expectations
that the rally that began late last year may have further to
go.
The Nikkei Stock Average climbed 3% after diving 7.3% in the
previous session, while the broader Topix advanced 2.6% after
Thursday's 6.9% plunge.
"Thursday's stomach-turning correction in Japan and Asia
ultimately strikes us mostly as a 'mere' step-back .... on a
continuing upward path for Japanese and Asia-Pacific equities,"
said Nomura Securities equity strategist Michael Kurtz.
The Nikkei Average is still up more than 60% since the beginning
of November 2012.
A recovery in the U.S. dollar (USDJPY), which moved back above
the Yen102 level after slipping below Yen101 on Thursday, helped to
lift exporters, with financials also taking back some of their
losses.
The bounce in equities came ahead of Bank of Japan Gov. Haruhiko
Kuroda's appearance before lawmakers later in the day. Kuroda's
testimony comes amid concerns about upward pressure on Japanese
government bond yields, despite the central bank's plans to buy up
JGBs on an unprecedented scale.
Thursday's plunge in Japanese equities came against a backdrop
of extreme volatility in the bond market, which forced the Bank of
Japan to step in and offer funds to soothe investor nerves.
Still, some analysts said the recent spike in yields didn't
undermine the Bank of Japan's credibility.
"The spike in JGB yields has raised the concern that markets
might already be challenging the BOJ's new quantitative-easing
policy. But in sending yields much higher while moderately buying
the yen at the same time, the market discounted brighter nominal
[economic] growth, rather than challenged policy credibility,"
Société Générale global head of foreign exchange sales Sebastian
Galy wrote to clients.
In Thursday's trading in Tokyo, stocks across the board saw
buying support.
Shares of Mazda Motor Corp. (MZDAY) climbed 6.4%, Shinsei Bank
Ltd. (SKLKF) jumped 5.7%, shipping firm Kawasaki Kisen Kaisha Ltd.
gained 4.5%, mobile-service provider Softbank Corp. (9984.TO) rose
4.1%, and Tokyu Land Corp. was 4.4% higher.
Elsewhere in the region, South Korea's Kospi inched up 0.2%,
also recovering from Thursday's losses.
Australia's S&P/ASX 200 fell 0.7%, dropping further amid
worries about Chinese economic growth after disappointing
preliminary results from HSBC's survey on manufacturing activity in
China.
Several resource-sector stocks dropped in Sydney, with BHP
Billiton Ltd. (BHP) losing 0.5%, and Woodside Petroleum Ltd.
(WOPEY) shedding 0.4%.
Newcrest Mining Ltd. (NCMGF) rose 2.8% after gold futures
rallied overnight.
Shares of Echo Entertainment Group Ltd. plunged 10.8% after
Crown Ltd. [ sold a 10% stake in the casino operator.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires