June 17, 2016 / 3:42 AM / 2 years ago

Nikkei rebounds as strong yen trend pauses; Brexit worries loom

* Nikkei poised to post biggest weekly drop in more than 4 months

* Kuroda’s comments soothe sentiment - traders

* Nishimatsuya surges after raising profit outlook

By Ayai Tomisawa

TOKYO, June 17 (Reuters) - Japan’s Nikkei share average rebounded on Friday morning and recovered from four-month lows after the yen took a breather from its recent strong gains, lifting all sectors into positive territory.

The Nikkei soared 1.6 percent to 15,677.78 in mid-morning trade after tumbling 3.1 percent on Thursday after the Bank Of Japan refrained from introducing more stimulus, which triggered a sharp sell-off by short-term investors even though the outcome was widely expected.

For the week, the Nikkei has dropped 5.6 percent and is poised to post the biggest weekly drop in more than four months.

“At first, investors sold stocks after they reacted to the rising yen. But BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference somewhat soothed investor sentiment,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Kuroda said that yen rises and heightening volatility that do not reflect economic fundamentals are undesirable, and the central bank will closely watch markets including exchange-rate moves.

“Taking these points into account, we’re always ready to take additional easing steps without hesitation if needed to achieve 2 percent inflation,” Kuroda said.

The dollar last stood at 104.35 yen, having fallen as far as 103.555 - a low not seen since August 2014.

But in the short term, traders said that worries about Britain might vote to leave the European Union were keeping investors on edge.

“Everybody is looking at the situation very carefully, it’s the talk of the town everywhere, not just with the investors but companies as well,” said Kei Okamura, assistant investment manager at Aberdeen Investment Management. “They won’t make any major decisions at this juncture because there are quite a few uncertainties in the near term.”

Exporters rebounded, with Toyota Motor Corp up 1.9 percent, Panasonic Corp 1.8 percent firmer and Canon Inc 0.9 percent higher.

Nishimatsuya Chain Co jumped 18 percent after the children’s clothing chain store operator raised its operating profit forecast for the fiscal year through February 2017 to 7.53 billion yen from the previously forecast 6.83 billion yen.

The broader Topix rose 1.2 percent to 1,256.42 and the JPX-Nikkei Index 400 gained 1.2 percent to 11,323.74. (Editing by Jacqueline Wong)

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