Nikkei touches 13-1/2-month high on U.S.-China trade talks progress

TOKYO, Nov 26 (Reuters) - Japan’s benchmark Nikkei hit its highest level in more than a year on Tuesday, led by electronics part and semiconductor-related stocks as a weaker yen and progress in Sino-U.S. trade talks buoyed appetite for export-oriented firms.

The Nikkei share average climbed as much as 1.4% to 23,608.06, its highest level since Oct. 5, 2018, but was then hit by some profit-taking to close at 23.373.32, 0.4% higher on the day.

Tokyo shares extended early gains after China’s commerce ministry said Vice premier Liu He, China’s chief trade negotiator, held a call with his U.S. counterparts and that both sides agreed to maintain communication on remaining issues.

“Some hedge funds that had staked out short positions in developed world stocks have begun unwinding those positions now that short-term downside tests are looking less likely,” said Masanari Takada, cross-asset strategist at Nomura Securities.

“With no major bad news coming in, some players appear to have been inexorably pulled back into taking on risk, thinking it was a bad call to try to capture the downside. It looks like we are seeing typical early symptons of FOMO (fear of missing out).”

Wall Street’s three major stock indexes closed at records on Monday on the reports of progress on a tariff truce between the world’s two largest economies.

A Chinese state-backed tabloid said Beijing and Washington were “very close” to an initial pact, which lifted New York-listed semiconductor and other trade-sensitive stocks.

Taking a positive cue from this, chip-related and electronics component firms were also buoyant in Tokyo on Tuesday.

Advantest Corp climbed 3.6% and Tokyo Electron Ltd rose 2.7%, while Murata Manufacturing Co and TDK Corp jumped 4.6% and 3.7%, respectively.

The Japanese yen weakened by as much as 0.3% to 109.205 versus the dollar on Tuesday, supporting exporters as a softer yen boosted overseas corporate profits.

Export-oriented Sony Corp climbed 2.7%, Panasonic Corp added 1.4%, while Nissan Motor Co rose 1.2%.

Hitachi Ltd gained 0.9% after the Nikkei business daily reported on Monday that the Japanese conglomerate is nearing a deal to sell its 51% stake in Hitachi Chemical Co to Showa Denko KK in a transaction that could be worth about 950 billion yen ($8.7 billion).

Hitachi Chemical soared 15.4%, while Showa Denko shed 6.0% to become the seventh-most traded stocks on the main board as the transaction amount appears to be too big for the chemical engineering group.

Elsewhere, Asahi Kasei Corp advanced 1.7% after the Japanese chemical firm made a $1.3 billion offer to buy Denmark’s pharmaceutical company Veloxis.

The broader Topix rose 0.2% to 1,705.71, while the Mothers index for startups climbed 1.2% to 905.19, its highest level in near four month. ($1 = 108.6400 yen) (Reporting by Tomo Uetake; Editing by Sam Holmes & Shri Navaratnam)

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