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Tokyo shares hit 3-1/2-month high on recovery hopes

SYDNEY, June 5 (Reuters) - Japanese stocks advanced to a 3-1/2-month high on Friday, tracking stronger U.S. futures, as sustained optimism about an economic rebound from a coronavirus-driven slump helped offset early profit-taking.

The benchmark Nikkei average reversed early losses to end 0.7% higher at 22,863.73, its highest closing level since Feb. 21.

E-Mini futures for the S&P 500 climbed 0.8% by late Asian trade, providing a boost to Japanese stocks, which had seen some profit-taking in the morning session.

For the week, the Nikkei gained 4.5% - its third straight weekly gain.

The broader Topix rose 0.5% on Friday to 1,612.48, its highest closing since Feb.21. The index also marked its third straight weekly gain, rising 3.1%.

All but eight of the 33 sector sub-indexes on the Tokyo exchange finished higher, with air transport being the top-performing sector, up 8.2%, after U.S.-listed airline stocks jumped overnight. Japan Airlines soared 9.7% and ANA Holdings surged 7.1%.

Reflecting continued confidence in the revival of the global economy, the safe-haven yen weakened further, with the dollar/yen hitting a fresh two-month high of 109.38 yen and the euro/yen touching a 13-month high of 124.43 yen in Asian trade.

As a weak yen boosts Japanese manufacturers’ profits made abroad when repatriated, shares of export-oriented automakers were in demand. Mazda Motor leaped 5.9%, while Nissan Motor and Honda Motor gained 4.8% and 3.8%, respectively.

Longer-term U.S. Treasury yields jumped overnight, providing a tailwind for Tokyo-listed financial stocks . Dai-ichi Life Holdings advanced 6.8% and Mitsubishi UFJ Financial Group (MUFG) climbed 2.6%.

Toshiba Corp rose 3.4% after the company’s earnings. The firm said strong orders for infrastructure projects and cost cuts will help partly offset an impact from the COVID-19 outbreak. (Reporting by Tomo Uetake; Editing by Rashmi Aich & Aditya Soni)

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