Japan’s Nikkei share average rose more than 1.5 per cent on Thursday morning, rebounding from Wednesday’s three-week low, helped by short-covering and hopes that the central bank is buying stocks.
The Nikkei benchmark added 296.42 points to 19,331.26 in mid-morning trade.
As of Wednesday, the benchmark had dropped 3.6 percent from its 15-year high closing level of 19,754.36 hit last week.
“Hedge funds are seen covering their short positions as the Nikkei fell sharply this week,’’ said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“But they are short-term investors, so whether the gains are sustained throughout the day is uncertain.’’
BoJ buying boosts sentiment
Traders noted hopes that the Bank of Japan will buy stocks during periods of market weakness were supporting the sentiment. Central bank data showed that it bought ¥35.2 billion worth of exchange traded funds (ETF) on Wednesday, when the market fell to a three-week low.
The positive sentiment offset Wall Street’s drop after weaker-than-expected data spurred concerns over economic growth ahead of Friday’s jobs report.
Banking shares were higher as investors bought back from the recent falls, with Mizuho Financial Group rising 1.7 per cent and Sumitomo Mitsui Financial Group gaining 2.4 per cent.
Mobile application providers soared after the Nikkei business daily said messaging app developer Line filed a second application in Tokyo to go public, with an eye on an initial public offering as early as this year.
Internet advertising services provider Adways Inc jumped 15 per cent, e-book company Media Do Co soared 10 per cent and gaming content provider Ateam Inc surged 8.5 per cent.
Olympus Corp, however, tumbled 5.8 per cent to a near one-month low after Sony Corp halved its stake in the camera and endoscope maker to raise funds for a restructuring drive. Sony rose 2.8 per cent.
The broader Topix gained 1.6 per cent to 1,553.49 and the JPX-Nikkei Index 400 added 1.7 per cent to 14,126.90.