TOKYO, Dec 16 (Reuters) - Japanese stocks rebounded on Wednesday morning with sentiment helped by Tuesday’s broad gains on Wall Street and a second straight day of rising oil prices.
The Nikkei share average gained 1.7 percent to 18,879.28 during midmorning trading, as sentiment was further supported by an overnight weakening of the yen against the dollar.
The gains came as top U.S. Federal Reserve officials began a two-day policy meeting expected to end with the first U.S. interest rate increase since 2006.
“A lot of capital will be looking for a temporary home outside of the U.S. so as to avoid the likely increase in volatility after the hammer falls. And in the context of our current world markets, for many Japan looks like a credible home,” said Martin King, co-managing director at Tyton Capital Advisors.
Oil prices rose for a second straight day as short-covering and technical support halted a slide to 11-year lows, boosting energy shares and broadly improving sentiment.
The Topix subindex for oil and coal stocks rose 3.1 percent in midmorning trading. Showa Shell Sekiyu KK shares gained as much as 3.3 percent.
Financial sector shares also outperformed ahead of the Fed’s expected rate increase. The Topix subindex for banking added 3.4 percent during midmorning trading while the securities sector soared 4 percent.
Entertainment business operator Square Enix Holdings Co rose 6 percent after Goldman Sachs raised its rating to ‘buy’ from ‘neutral’ based on strong sales of video games for the PS4 and Xbox One consoles.
Food retailer Kobe Bussan Co Ltd gained as much as 13 percent after the company forecast strong profits for the year ending October 2016.
The broader Topix climbed 1.9 percent to 1,530.56 with all but two of its 33 sub-indexes in positive territory in midmorning trade.
The JPX-Nikkei Index 400 rose 1.9 percent to 13,775.54. (Reporting by Joshua Hunt; Editing by Eric Meijer)