March 10, 2020 / 7:59 AM / 25 days ago

Japan shares rebound in volatile session on short-covering

SYDNEY, March 10 (Reuters) - Japanese stocks settled higher on Tuesday after a volatile session that saw shares fall on worries over the economic impact of the coronavirus epidemic and an oil price crash before short-covering lifted markets.

The Nikkei average finished 0.9% higher at 19,867.12, having earlier fallen to a three-year low of 18,891.77. It moved as much as 1,078.23 points in intraday trade, marking its largest daily swing since February 2018.

Traders said short-covering was behind the rally, following Monday’s 5.1% plunge amid a global equity rout.

The broader Topix rose 1.3% to 1,406.68, also bouncing back from earlier steep losses.

All but three of the 33 sector sub-indexes on the Tokyo Stock Exchange ended higher, with securities, real estate and warehouse and wharf being the top three performing sectors.

On the currency front, the safe-haven yen tumbled more than 2% versus the dollar, after U.S. President Donald Trump pledged to take “major” steps to protect the economy and floated the idea of a payroll tax cut with congressional Republicans.

This provided a tailwind for Tokyo-listed bluechip exporters broadly as a weaker local currency boosts corporate profits when they are repatriated.

Sony Corp climbed 3.3%, Mazda Motor Corp rose 3.7% and Tokyo Electron Ltd advanced 3.9%.

Capping the gains in Japanese shares were concerns about the impact of the virus outbreak on global economic growth and lower oil prices.

The virus has spread to more than 100 nations and infected over 114,000 people globally, with Italy ordering everyone across the country not to move around other than for work and emergencies, while banning all public gatherings.

Also weighing on investor sentiment were downside risks to oil prices. Oil futures stabilised in Asia on Tuesday, after falling to their lowest since 1991 on Monday.

Japan’s largest oil and gas exploration and production firm, Inpex Corp, tumbled 4.3%.

Ricoh Co Ltd jumped 7.0% after the company announced a plan to sell a partial stake in Ricoh Leasing Co Ltd to Mizuho Leasing Co Ltd in late-April, while Ricoh Leasing lost 4.6% and Mizuho Leasing added 1.0%. (Reporting by Tomo Uetake; editing by Uttaresh.V and Subhranshu Sahu)

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