April 27, 2020 / 4:01 AM / 4 months ago

CORRECTED-Nikkei gains on upbeat earnings; futures steady after BOJ eases further

(Corrects percent change in morning trade to 2.2%, not 1.2% in third para)

SYDNEY, April 27 (Reuters) - Japanese shares rose on Monday as some better-than-expected earnings lifted market sentiment even as underlying worries about the outlook tempered overall demand.

The gains came just before the Bank of Japan’s widely anticipated decision to further expand monetary stimulus.

The benchmark Nikkei average advanced 2.2% to 19,678.87 by the midday break, during which the BOJ announced measures to ease corporate funding strains, including increased buying of commercial paper and corporate bonds.

The Nikkei futures showed a muted response.

Advantest Corp jumped 8.2% after the chip-testing equipment supplier forecast a 14.2% year-on-year increase in operating profit for the April-June quarter.

“Even with difficult external conditions, Advantest expects steady growth in test demand and aims to sustain and expand market shares in 5G milliwave and high-end memory areas,” said Jefferies analyst Masahiro Nakanomyo.

Fanuc Corp surged 11.1% even though the factory automation company didn’t disclose the full-year profit guidance and gave a forecast for the April-September half instead, saying the impact from the coronavirus lockdowns at major cities will materialize from March.

Denso Corp shed 3.1% after the auto parts maker slashed earnings forecast for the year ending March 2021.

The broader Topix added 1.1% to 1,436.86, with all but two of the 33 sector sub-indexes on the Tokyo exchange trading higher.

Highly cyclical sea transport, non-ferrous metals and electric machinery were the top three performing sector subindexes on the main bourse.

The volume of shares traded on the main board valued at only 843 billion yen by the midday recess - well below the normal value.

The market’s volatility index, considered a fear gauge based on option pricing, was down 9.3% to 35.1.

Traders said many investors stayed on the sidelines ahead of key policy meetings of the U.S. Federal Reserve and the European Central Bank this week.

Bucking the overall market, the banking sector came under pressure after S&P revised the outlook to stable from positive on Japan’s three megabanks.

Mitsubishi UFJ Financial Group (MUFG) Inc and Sumitomo Mitsui Financial Group (SMFG) Inc dropped 0.2% and 0.5%, respectively.

Elsewhere, the index of Mothers start-up shares rose 2.3%. (Reporting by Tomo Uetake; Editing by Shri Navaratnam)

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