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Nikkei ignores downgrade, climbs on results

Tokyo - Tokyo stocks gained 1.4 percent on Wednesday after a batch of Japanese and US corporate earnings came in better than expected, with digital camera maker Canon soaring on relief that parts procurement woes look set to be resolved in a few months.

Some of the first earnings reports from manufacturers which have had to curtail production after last month's quake and ensuing nuclear crisis included industrial robot maker Fanuc Ltd forecasting a 17 percent rise in first-half operating profit and minivehicle maker Daihatsu Motor booking a big jump in annual income.

Credit rating agency Standard & Poor's threatened to cut Japan's sovereign rating but the move had little impact on the market.

But with many quake-hit firms not giving forecasts for this financial year and still many reports to come, investors were reluctant to build large positions, particularly ahead of the outcome of the US Federal Open Market Committee's policy meeting and first ever post-meeting news conference by Fed chairperson Ben Bernanke.

Bernanke will be closely watched for hints on how the Fed plans to exit from its ultra-loose monetary policy.

"Usually market activity picks during the middle of the earnings season, but it's not like that this time," said Toru Hashizume, chief investment officer at Stats Investment Management.

"Investors still cannot be active as uncertainties remain for many companies as they are not providing forecasts. The Japanese market will seek direction from the overseas market, so today's move after the FOMC could be important."

The benchmark Nikkei average closed the day up 133.15 points at  ,691.84. It's 1.4 percent climb was the strongest daily percentage gain since April 20.

The broader Topix advanced 6.23 points, or 0.8 percent, to 839.87.

According to Aberdeen Asset Management and JP Morgan, Japanese stocks, particularly auto and parts makers, are poised for strong gains after a short-term correction.

Canon, the most actively traded stock by turnover on the main board, surged 7 percent to 3,740 yen with market participants saying they were relieved that its quarterly results had not yielded any major surprises.

It reported a 5 percent fall in quarterly operating profit and cut its annual outlook.

"Investors are shifting to forward-looking factors. Since it looks like Canon will resume normal parts procurement by June and July, investors are trying to get past bad numbers," said Yumi Nishimura, a senior market analyst at Daiwa Securities.

But Sony dropped 2.0 percent to 2 366 yen after its PlayStation video game online network was broken into, in one of the largest-ever internet security breaches.


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