Nikkei rises on strong U.S. data, weaker yen
By Joshua Hunt
TOKYO May 18 (Reuters) - Japanese stocks rose in choppy trade on Wednesday morning after the market digested stronger-than-expected GDP data that initially seemed unlikely to support further stimulus or the delay of a consumption tax hike, both widely expected by the market.
The Nikkei share average rose 0.6 percent to 16,750.73 in late morning trade.
Fresh data showed Japan's economy expanded at the fastest pace in a year in the first quarter thanks to a consumption boost from the leap year, rebounding from the previous quarter's contraction and beating median market forecasts.
"The market's initial reaction to the GDP data was a slight strengthening of the yen," said Stefan Worrall, director of Japan equity sales at Credit Suisse.
"Japanese policy makers could really use a sense of crisis to help justify ramping up fiscal stimulus or pushing out the VAT (sales tax) hike and a stronger GDP figure seems to undermine that narrative, though there is also some buoyancy from stronger U.S. inflation and increased expectations for Fed rate hikes."
The yen resumed its weakening trend in mid-morning after investors digested the GDP data and focused instead on the U.S> data.
"Taking into account the effects of the extra day from the leap year, which pushed up the quarter-on-quarter growth rate by 0.3 percentage point, growth is not as strong as the headline number shows," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
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