MARKETS-JAPAN-NIKKEI:Nikkei rises, shrugs off China data; Nomura falls
By Dominic Lau
TOKYO (Reuters) - The Nikkei share average advanced on Thursday, shrugging off data showing China's manufacturing activity shrank for a fifth straight month in March, with market participants seeing Japanese equities as a buy.
"People are just more upbeat on Japanese equities. The China PMI looked a bit nasty but didn't turn out to be that bad," a senior dealer at a foreign bank said.
The HSBC flash purchasing managers' index showed the overall rate of contraction in China's manufacturing sector accelerated, with new orders sinking to a four-month low.
"I still think the Japanese market is a buy, and I think most people agree and they are under-invested," the dealer said.
The Nikkei has risen nearly 20 percent so far this year, buoyed by a run of robust U.S. economic data and accommodative monetary policy by global central banks. Market players expect further gains as a weaker yen will likely lift corporate earnings expectations.
However, Japanese firms with large exposure to China were down on Thursday, with construction machinery maker Komatsu Ltd <6301.T> off 1.4 percent and industrial robot maker Fanuc Corp <6954.T> losing 1.2 percent.
The Nikkei closed up 0.4 percent at 10,127.08 after snapping a five-session winning streak on Wednesday.
The broader Topix added 0.4 percent to 862.07. Nearly 2 billion shares changed hands on the main board, down from 2.12 billion on Wednesday.
Technical indicators suggest a pullback could be on the cards, with the Nikkei's 14-day relative strength index at 75 and the Topix's at 69.7. Seventy or above is considered overbought.
Still, Goldman Sachs raised its Topix six-month target to 970 from 900, representing an upside of 12.5 percent from current levels.
"While we see risks of near-term consolidation, we believe the fundamental factors remain supportive for the market, and we recommend investors to add to positions on any weakness," Goldman Sachs analysts said in a report.
NOMURA DOWN, SANRIO SHINE
Nomura Holdings <8604.T> fell 1.3 percent, extending a 4.1 percent loss the previous session, and was the most traded stock on the main board by turnover after sources said an employee at the firm was the source of a leak in an insider trading case.
Japan's securities regulator recommended a 50,000 yen fine against Chuo Mitsui Asset Trust, a unit of Sumitomo Mitsui Trust Holdings Inc <8309.T>, on Wednesday, saying the asset manager sold Inpex Corp shares after a tip-off from a broker about its plan for a roughly $6 billion offering.
Sumitomo Mitsui Trust recovered 2.2 percent after Wednesday's 5.1 percent battering.
Sanrio Co climbed 6 percent after the maker of Hello Kitty toys raised its year-end dividend forecast for the fiscal year ending March by 25 percent to 25 yen due to decent sales, particularly in the United States.
"Some stocks such as steel and shippers that are not good stories structurally have done pretty well in this rally -- we are almost in the 13th week of buying. We would be looking for them to head back down," another trader said.
"Some of the better stocks that have lagged, like Gree <3632.T>, DeNA <2432.T> and Sanrio, are going to outperform a little bit."
Japan's iron and steel sector <.ISTEL.T> lost 1.5 percent and the shipping subindex <.ISHIP.T> eased 0.7 percent, while
social gaming firm DeNA Co Ltd added 1 percent.
Gree Inc, rival to DeNA, rose 2.1 percent after saying it would form a business alliance with Japanese communication firm Dentsu Inc <4324.T> on promoting its social networking services, acquiring content and venture investments. Dentsu shares were up 1.2 percent.
(Additional reporting by Mari Saito; Editing by Nick Macfie)