June 11, 2019 / 2:54 AM / 2 months ago

Nikkei edges higher in choppy trade; weak yen supports exporters

* Tokyo Electron, TDK rise

* Defensive stocks underperform

By Ayai Tomisawa

TOKYO, June 11 (Reuters) - Japan’s Nikkei edged higher in choppy trade on Tuesday morning as investors took profits from sharp gains on the previous day, while a weaker yen underpinned cyclical stocks such as exporters.

The Nikkei share average rose 0.4% to 21,208.09 at the midday break, after gaining 1.2% on Monday.

On Monday, Japanese stocks recovered above the 21,000 level and hit a two-week high, with buyers encouraged by hopes for a U.S. interest rate cut and relief over U.S. President Donald Trump withdrawal of a tariff threat against Mexico.

Strategists said investors were awaiting more cues on U.S. monetary policy from the Federal Reserve’s June 18-19 policy meeting as well as developments in the U.S.-China trade war ahead of the G20 summit later this month.

Trump said on Monday he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in talks with Chinese President Xi Jinping at the G20 summit.

“Japanese stocks need more catalysts to rise further, but the Nikkei’s downside should be supported as it has recovered its 25-day moving average (of 21,072.19),” said Takuya Takahashi, a strategist at Daiwa Securities.

Financials were supported by higher U.S. yields, with Mitsubishi UFJ Financial Group rising 1.6% and Sumitomo Mitsui Financial Group adding 1.2%.

Exporters were bought after the dollar advanced 0.2% to 108.61 yen.

Tokyo Electron gained 2.2%, TDK Corp rose 2% and Yaskawa Electric Corp surged 3.9%.

Other cyclical stocks were also in demand, with sea transport and steel makers attracting buyers. Mitsui OSK Lines surged 1.6% and Nippon Steel Corp rose 1%.

MonotaRO, which provides factory materials through mail order, jumped 5.3% after its May sales surged 22.6% on the year.

Defensive stocks such as railroad shares and drugmakers underperformed. East Japan Railway dropped 0.6% and Astellas Pharma slipped 1%.

The broader Topix gained 0.5% to 1,560.47. (Editing by Simon Cameron-Moore)

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