Nikkei rises to 3-week high on earnings optimism
* Toshiba rises as retail investors seen covering short positions - traders * Gold rout pressures mining shares By Ayai Tomisawa TOKYO, July 21 (Reuters) - Japan's Nikkei share average climbed to three-week highs on Tuesday morning, supported by growing expectations for strong first-quarter earnings. Investors returned to the market after a three-day weekend in Japan, and were looking to earnings from the likes of Yaskawa Electric Corp and Shin-Etsu Chemical Co this week. Results from some of the bigger companies, including Nissan Motor Co, are due next week. The Nikkei share average rose 0.4 percent to 20,726.49 in midmorning trade after climbing as high as 20,770.02, the highest level since June 26. "Although companies won't likely change their full-year forecasts this time," investors are keen to see business plans are on track, said Masayuki Kubota, chief strategist at Rakuten Securities. "Most of them expect to confirm that companies' earnings are resilient." Toshiba Corp outperformed, rising as high as 5.8 percent to a near two-week high of 398.6 yen as retail investors and other short-term hedge funds were seen covering their short positions on the view that the bad news has already been priced in. A third-party committee hired to look into accounting irregularities found the company had overstated its operating profit by 151.8 billion yen ($1.22 billion) over several years, an independent investigation said in a report on Monday. "Institutional investors and other long-term funds have already unloaded Toshiba shares, so the current state of its stock price is driven by short-term investors' trade," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. "The bad news is out. As long as Toshiba won't be delisted, such trades will continue." Shippers were stronger after the baltic dry index, or freight charges, rose overnight. Traders also said that worries about a slowdown in demand in China have receded after Chinese shares stabilized. Mitsui O.S.K Lines soared 4.1 percent and Kawasaki Kisen Kaisha surged 2.1 percent. Metal and mining shares underperformed hit by a recent rout in gold prices. Mitsubishi Materials Corp dropped 2.0 percent and Sumitomo Metal Mining shed 1.8 percent. The broader Topix gained 0.3 percent to 1,668.37 and the JPX-Nikkei Index 400 advanced 0.3 percent to 15,062.86. (Editing by Shri Navaratnam)
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