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Japanese Stocks Hit 22-Month High

The Nikkei gains 2% and is up 10.3% year to date, more than any other big market, amid signs of an economic rebound.

March 27, 2004|From Bloomberg News and Reuters

TOKYO — Japan's Nikkei stock index jumped 2% to end at a 22-month high Friday, on more signs that the nation's economy is on the rebound.

Japanese stocks are leading all other major markets year-to-date, with a 10.3% gain measured in yen terms. By contrast, the U.S. Standard & Poor's 500 index is down 0.4% this year.

Japanese retail sales rose in February for their second consecutive increase and household spending unexpectedly climbed, the government said Friday.

Sales at department stores, supermarkets, restaurants and other retailers rose 1.7% from January, seasonally adjusted, the Ministry of Economy, Trade and Industry said. Spending by households headed by salaried workers rose 2.5%, a separate government report said.

A revival in consumer spending, which makes up more than half of the world's second-largest economy, may help sustain a recovery as a strengthening yen reduces sales for exporters. The Japanese economy grew at a 6.4% annual pace in the fourth quarter, the fastest since the nation's asset bubble burst in 1990.

An index published Tuesday tracking the nation's service industries grew 2.6% in January from December, the fastest pace in almost four years.

Japan "is not just depending on exports alone," said Rob da Silva, who helps manage the equivalent of about $740 million of bonds as head of fixed income in the Asia-Pacific region at Principal Global Investors in Sydney. "We expect the recovery to broaden out and be sustainable."

The Nikkei index gained 239.74 points to end at 11,770.65, the highest since June 3, 2002.

The broader Topix index jumped 1% to 1,176.32, its highest close since Aug. 15, 2001.

"The Japanese stock market is starting to become the center of the world's attention," said Toru Ohara, who oversees $2.8 billion as the chief investment officer at Franklin Templeton Investments Japan Ltd. in Tokyo.

Major European markets, and other big Asian markets, mostly are lagging Japan's gains this year. The British market is down 2.7%, the German market is off 3.6%, the Hong Kong market is off 0.7% and the Australian market is up 3.9%.

For U.S. investors, the Nikkei's gains this year have been boosted by the strong yen. The index is up 11.5% in dollar terms.

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