June 11, 2018 / 2:57 AM / 6 months ago

Nikkei rises but gains limited before U.S.-N.Korea summit

TOKYO, June 11 (Reuters) - Japanese stocks rose on Monday but gains were limited as investors focused on the U.S.-North Korea summit, while Tokyo Electric soared as the outcome of a local election was seen to be positive for one of the utility’s nuclear power plants.

The Nikkei share average edged up 0.2 percent to 22,740.40 in midmorning trade, after opening slightly lower.

Defensive sectors such as food and pharmaceuticals outperformed, while investors remained risk-averse amid major economic and political events around the world.

U.S. President Donald Trump arrived in Singapore on Sunday for a historic summit with North Korean leader Kim Jong Un that could lay the groundwork for ending a nuclear stand-off between the old foes.

“The market should be quiet this week because after the summit is over, there are Fed, ECB meetings so investors are likely to remain cautious this week,” said Masashi Oda, general manager of the strategic investment department at Sumitomo Mitsui Trust Asset Management.

The U.S. Federal Reserve is widely expected to announce an interest rate hike on Wednesday while the European Central Bank will debate whether to end bond purchases later this year.

“If U.S. yields soar sharply after the Fed meeting, the stock market may be hit,” Oda said.

Traders also said that global trade war worries will likely persist after Trump threw the G7’s efforts to show a united front into disarray after taking aim at Canadian Prime Minister Justin Trudeau.

Food and drugmaker stocks staged a rally, with Ajinomoto Co rising 1.7 percent and Kikkoman Corp advancing 1.0 percent, while Astellas Pharmaceutical added 0.7 percent.

Tokyo Electric Power Co jumped as high as 8.8 percent after Hideyo Hanazumi, a candidate backed by Prime Minister Shinzo Abe’s ruling coalition, was elected governor of Niigata prefecture.

Traders saw the vote as positive for Tepco’s Kashiwazaki-Kariwa nuclear plant, which was shutdown during the Fukushima disaster in 2011.

Japanese media had reported in April that the previous governor had opposed restarting the site’s seven reactors, which is crucial to Tepco’s recovery plans.

The broader Topix advanced 0.2 percent to 1,784.56. (Reporting by Ayai Tomisawa Editing by Darren Schuettler)

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