Tokyo Shares End With Nikkei Slightly Up On Weak Yen Amid Caution

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By Kana Inagaki 
   Of DOW JONES NEWSWIRES 
 

TOKYO (Dow Jones)-- Tokyo stocks closed with the Nikkei Stock Average slightly higher on Monday, helped by optimism over a weaker yen and Friday's upbeat U.S. jobs report. Caution over the corporate earnings outlook after Japan's devastating March 11 earthquake capped gains, however.

The Nikkei rose 10.50 points, or 0.1%, to 9718.89 following Friday's 0.5% decline. The Topix index of all the Tokyo Stock Exchange First Section issues was weaker, falling 2.87 points, or 0.3%, to 859.75, with 24 of 33 subindexes ending in negative territory.

Trading volume was relatively light compared to recent sessions, totaling just over 2.5 billion shares.

Shares opened on a strong note on fresh signs of a U.S. economic recovery. Nonfarm payrolls rose by 216,000 last month, while the unemployment rate edged down to 8.8%, its lowest level since March 2009.

Select exporter shares gained as the dollar traded above the Y84 level. Fanuc closed up 1.3% at Y12,510.

But the corporate outlook at home remains grim as authorities struggle to stem radioactive water leaking from Tepco's crippled Fukushima Daiichi power plant located northeast of Tokyo.

Japanese firms also became more pessimistic about business conditions in the coming three months following the earthquake and tsunami, according to supplemental responses to the Bank of Japan's tankan survey received after the disaster.

"It's difficult for investors to be optimistic enough to push the market higher solely on a weaker yen since there is uncertainty about corporate profits with the nuclear power plant problems likely to drag on for some time," said Yutaka Yoshii, general manager at Mito Securities.

Among individual gainers, heavyweight Fast Retailing lifted rose 3.4% to Y11,050 after Credit Suisse upgraded the stock to Outperform from Neutral. UBS also lifted its rating to Buy from Neutral. The upgrades came even as the retailer said Friday that domestic same-store sales in March at its Uniqlo casual clothing chain tumbled 10.5% on-year due to the impact from the earthquake.

"We believe Fast Retailing is well placed to exert its lead based on its price competitiveness and expertise in functional undergarments and other practical clothing," UBS analyst Nozomi Moriya wrote in a report, adding that consumers are likely to be more price-conscious following the disaster.

IHI closed up 4.0% at Y210 after the Japanese heavy machinery maker said Monday that it signed a basic agreement with Sweden's Atlas Copco AB on the marketing of industrial-use compressors.

Despite the weaker yen, Sony fell 1.2% to Y2,640 after Goldman Sachs lowered its rating to Neutral from Buy while cutting its target price to Y2,700 from Y3,100. The brokerage said that as the electronics maker is dependent on external suppliers for chip sets and lenses that go into its televisions and digital cameras, the company is vulnerable to operational suspensions at its suppliers.

June Nikkei 225 futures closed up 10 points, or 0.1%, at 9710 on the Osaka Securities Exchange.

-By Kana Inagaki, Dow Jones Newswires; 813-6269-2795; kana.inagaki@dowjones.com