Nikkei hits 7-year high on speculation PM will delay tax hike

martes 11 de noviembre de 2014 02:42 GYT

* Rising speculation Abe may twin tax hike delay and snap
    * Rally led by buying in Nikkei futures by CTA
    * Citizen jumps after earnings, real estate shares surge

    By Hideyuki Sano
    TOKYO, Nov 11 (Reuters) - Japan's Nikkei share average hit a
seven-year high on Tuesday as speculation swirled that Prime
Minister Shinzo Abe may postpone a planned sales tax increase
and call a snap election to bolster his political standing.
    The Nikkei share average rose 2.1 percent to
17,124.11 points, its highest close since October 2007, with
traders citing heavy buying in the Nikkei futures by
speculators such as commodity trading advisors (CTAs). 
    Local media reported on Tuesday that Abe might call a snap
election before the end of the year if he decides to delay a
planned hike in the sales tax to 10 percent slated for next
October. No election for parliament's lower house need be held
until 2016. 
    Abe's junior coalition partner said on Tuesday his party
should be prepared for a possible early election.
    The news surprised financial markets, which have long
expected that Abe will go ahead with the second stage of the
planned tax increase despite a sharper-than-expected blow to the
economy from the first tax hike in April.
    A snap election could cement Abe's grip on power because
opposition parties are too fragmented to win, despite a decline
in Abe's approving ratings.
    "You just can't come up with a scenario of a victory by the
opposition. So this means Abe will have four more years to go,"
said Norihiro Fujito, senior strategist at Mitsubishi UFJ Morgan
Stanley Securities.
    "Both fiscal and monetary policies will be supporting growth
in the near future. And today markets started to price that in,"
he added.
    Japanese shares have jumped after the Bank of Japan
surprised investors by unleashing more stimulus on Oct 31.
    The rally on Tuesday was led by buying in Nikkei futures and
options, which led to sharp outperformance of the Nikkei
compared to the broader market.
    The broader Topix gained 1.1 percent while the new
JPX-Nikkei Index 400 rose 1.2 percent, just over a
half of 2.1 percent gains in the Nikkei.
    Investors snatched up shares with good earning results as
the quarterly earning period headed into the final stretch. 
    Citizen Holdings jumped 11.5 percent after it
revised up its profit outlook slightly. Sumitomo Metal Mining Co
 which hiked its full-year net profit forecast, jumped
4.9 percent.

 (Editing by Jacqueline Wong & Kim Coghill)