March 18, 2019 / 6:32 AM / 7 months ago

Nikkei driven up by chip-related stocks but weak export data caps gains

* Chip stocks Sumco, Tokyo Electron surge

* Property, drugmakers, utilities have outperformed in March

* Investors cautious on concerns about weak China demand

By Ayai Tomisawa

TOKYO, March 18 (Reuters) - Japan’s Nikkei rose on Monday as chip-related stocks tracked strength in their U.S. peers, but weak February export data checked the market’s upside.

The Nikkei share average ended 0.6 percent higher to 21,584.50.

U.S. stocks rallied on Friday, with the S&P 500 posting its best weekly gain since the end of November, while tech shares led Nasdaq to its best weekly rise this year.

Among Japanese chip-related stocks, Sumco Corp surged 3.9 percent, Tokyo Electron added 3.2 percent and Advantest Corp gained 2.1 percent.

Index-heavyweights also rallied, with SoftBank Group Corp climbing 1.2 percent and Fanuc Corp up 1.6 percent.

The broader market gains were limited by concerns about global demand after data showed that Japan’s exports fell for a third straight month in February, due to declines in shipments of semiconductor production equipment and cars..

The data also showed exports to China, Japan’s biggest trading partner, rose 5.5 percent year-on-year, rebounding from a 17.4 percent drop in January.

However, overall trade with the world’s second largest economy remained weak. Even after averaging effects of the Lunar New Year holiday, China-bound shipments fell 6.3 percent in the January-February period from a year earlier.

“Concerns about weak demand from China have spread to other Asian regions, so unless the market confirms that the demand fall has hit bottom in Asia, investors will likely stay risk averse,” said Daiju Aoki, regional chief investment officer and chief economist at UBS Securities Wealth Management.

Defensive sectors have outperformed in March, with real estate up 5 percent, drugmakers advancing 2.7 percent and utility stocks adding 1.4 percent. The Nikkei has gained 0.9 percent since the start of the month.

“Investors will probably keep buying defensive names until we see a sign of resolution in the U.S.-China trade war,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

The broader Topix rose 0.7 percent to 1,613.68. (Reporting by Ayai Tomisawa Editing by Shri Navaratnam)

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