Nikkei rises to fresh 7-year high on weak yen; Otsuka dives on M&A news

martes 2 de diciembre de 2014 22:08 GYT
 

* Otsuka Holdings dives to more than 1-month low after M&A
news
    * Technical chart shows market is overheated
    * BOJ bought 37.4 billion yen worth ETFs on Tuesday
    * Underlining sentiment strong, may see year-end rally -
analyst

    By Ayai Tomisawa
    TOKYO, Dec 3 (Reuters) - Japan's Nikkei share average rose
to a more than seven-year high on Wednesday after Wall Street
gained and the dollar hit a fresh seven-year high against the
yen, but Otsuka Holdings tumbled on news that it will
buy a U.S. drugmaker for about $3.5 billion.
    The Nikkei 225 gained 1.2 percent to 17,881.76
points by mid-morning, the highest level since July 2007.
    Market observers said there are signs that Japanese shares
are overheated, with the toraku ratio, or up-down ratio, rising
above 142. A level above 120 signals an overbought market.
    The ratio is calculated by dividing the 25-day moving
average of stocks on the Tokyo Stock Exchange's first section
that gained by the 25-day average of those that fell.
    "It is possible that the market may soon see a short-term
correction," said Takuya Takahashi, a strategist at Daiwa
Securities, adding that a trigger could involve macro-related
reasons such as a weak overseas economic figure.
    But he added that underlining sentiment remains positive,
with expectations that Prime Minister Shinzo Abe will win the
upcoming election and push economic reforms, while the recent
weakening in crude oil prices may help lift the country's
consumption.
    "We expect the market to see an year-end rally for the third
straight year," Takahashi said.
    Traders said that the Bank Of Japan's move on Tuesday to
purchase 37.4 billion yen of exchange-traded funds (ETFs)lifted
the mood as well.
    "That (BOJ's ETF buying) gives investors comfort that the
markets will be supported and the momentum continues to be up,"
said a senior trader at a foreign brokerage.
    Exporters were stronger after the dollar rose to 119.33 yen
 during Asian trade, its highest level since August 2007.
Panasonic Corp rose 2.3 percent and Toyota Motor Corp
 added 1.4 percent, which was also helped by strong U.S.
auto sales. 
    Otsuka Holdings dived as much as 5.6 percent to a more than
one-month low after saying it will buy U.S.-based Avanir
Pharmaceuticals Inc for about $3.5 billion to expand
its neurologic drug portfolio ahead of an expiration of a key
drug patent. Investors felt the price was too high.
 
    The broader Topix gained 0.7 percent to 1,438.36,
and the JPX-Nikkei Index 400 added 0.7 percent to
13,074.00.

 (Editing by Kim Coghill)