Nikkei scales 18-1/2 year peak on earnings optimism, Greek hopes
* Nikkei rises above dot-com bubble peak hit in 2000 * Supported by hopes on economy, higher payouts to shareholders * Financial share lead gains * Speculators major driver of rally By Hideyuki Sano TOKYO, June 24 (Reuters) - Japan's Nikkei share average vaulted to the highest level since 1996, ramping up the gains to around 20 percent since the start of the year thanks to signs of a pick up in economic growth, earnings optimism and hopes Greece will avoid a debt default. The Nikkei rose 0.5 percent to 20,922.00, rising above its peak of 20,833.21 hit at the height of the dot-com bubble in 2000. "Looking back from now, we had a bubble in 2000. But I would say today's market conditions are different. They reflect the economy more. I think the Nikkei's rally will accelerate in the second half of this year," said Soichiro Monji, chief strategist at Daiwa SB Investments. Japanese shares have rallied hard this year, with the Nikkei gaining about 20 percent since the start of the year on signs the recovery in the world's third-biggest economy was picking up speed. Companies, under pressure from the government to boost return-on-equity and shareholders' return, are also stoking the rally by increasing share buybacks and dividend payouts. Daiwa SB's Monji expects the Nikkei to reach above 25,000 by the end of the year, a level last seen in 1992. "All the economies in the developed world are expected to improve later this year. Domestically, wage increases and cheap oil prices will underpin consumption," he added. Investors were buying financial shares, many of which still have relatively inexpensive valuations, about 13 times of profits. Brokerage shares rose 1.6 percent, with Daiwa Securities Group gaining 2.2 percent and Nomura Holdings rising 1.8 percent. Among banks, Mizuho Financial Group and SMFG each rose 1.3 percent. The market also benefitted from growing optimism that Greece will clinch a cash-for-reform deal with its creditors by the end of this month to avert a default. Foreign hedge funds appeared to be aggressively trading Japanese stock futures, one of the most liquid equity futures around the world, based on headlines out of Europe, said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "The Nikkei rose for 12 days in a row late last month when foreign players bought 1.7 trillion yen of stocks. After that, the Nikkei took a step back early this month, when offshore investors sold one trillion yen. It's clear their moves are dictating the market," he said. "We have to keep in mind, though, that if they change their positions, the Nikkei could easily fall 1,000 points," he added. The broader Topix rose 0.4 percent to 1,683.53, hitting its highest level since 2007 at one point. (Editing by Shri Navaratnam)
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