Nikkei regains ground as yen weakens, inflation less than forecast
By Shinichi Saoshiro TOKYO, April 25 (Reuters) - Japanese shares gained on Friday, buoyed by a weaker yen and after inflation data came in lower than expected, reinforcing some hopes for further monetary easing by the Bank of Japan. The Nikkei share average 0.7 percent to 14,498.89 in morning trade, moving back towards a two-week high of 14,650 hit on Monday. The index had shed 1 percent on Thursday as the lack of a breakthrough in U.S.-Japan trade talks disappointed some investors. "Yesterday's selling was overdone, and a steady performance on Wall Street overnight set the market on course for a rebound," said Soichiro Monji, chief strategist at Daiwa SB Investments in Tokyo. "And although this is not a huge factor, the slightly weaker-than-expected Tokyo CPI data reinforced hopes for further BOJ easing," he said. Core consumer prices in Tokyo, a leading indicator of nationwide inflation, rose 2.7 percent in April from a year earlier to mark the biggest gain in more than two decades. But when the impact of a sales tax hike implemented on April 1 is stripped out, Tokyo consumer inflation came in at 1.0 percent, indicating that Japan is still some way off the central bank's 2 percent price target. The dollar rose 0.1 percent to 102.42 yen, pulling away from a one-week low of 102.085 hit on Thursday. A wait-and-see mood also prevailed ahead of earnings guidance from a number of Japanese companies for the new fiscal year to March 2015. Nikkei heavyweights Fanuc, an industrial robot manufacturer, and Denso, an autoparts maker, will announce their earnings Friday. Market participants will focus on individual stocks throughout the earnings season rather than the macro picture, said Kyoya Okazawa, head of global equities at BNP Paribas in Tokyo. Earnings announced after Thursday's market close were generally upbeat. Fuji Electric shares jumped 6.9 percent after the company forecast a 15 percent increase in operating profit for the current financial year after a 51 percent rise in the previous year. Hitachi Construction rose 2.6 percent after the company's profit estimates for the year ending in March beat analysts' forecasts. But Mitsubishi Motors slipped 1.1 percent even after the automaker on Thursday posted record profits for the year that ended in March and said it expected to hit its midterm annual operating profit target of 135 billion yen in this financial year to March 2015, two years earlier than planned. Still, Mitsubishi Motors has outperformed the broader market so far this month, rising about 1.3 percent compared with a fall of 1.9 percent for the Nikkei. Mining shares were among the best performers, rising 2.9 percent. Analysts said a rise in oil prices buoyed the sector. The new JPX-Nikkei Index 400 rose 0.79 XX percent to 10,682.30. (Additional reporting by Hideyuki Sano and Lisa Twaronite in Tokyo; Editing by Chris Gallagher)
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