Japanese shares hit eight month high in morning

TOKYO, Jan 13, 2011 (AFP) - Japanese shares hit an eight-month high Thursday morning after US stock markets rose to their best finishes since 2008 following embattled Portugal's bond auction success, dealers said.

The headline Nikkei index at the Tokyo Stock Exchange gained 0.64 percent or 67.78 points to 10,580.58 by the break, after touching an eight-month high of 10,620.57 in morning trade.

The Topix index of all first section shares increased 0.67 percent or 6.19 points to 935.83.

Portugal on Wednesday sold more than 1.2 billion euros ($1.5 billion) in long term debt at lower than expected interest rates, easing fears it would become the third eurozone country to accept a bailout.

The crucial bond auction sent a positive signal to global markets. In New York the Dow Jones Industrial Average rose 0.72 percent to close at 11,755.44, its highest closing level since August 11, 2008. European markets also surged.

"The issue (of European sovereign debt) will take a long time to resolve, but a weaker yen (against the euro) after the Portugal auction is providing relief for now," Masayoshi Yano, a senior market analyst at Meiwa Securities, told Dow Jones Newswires.

The European single currency rose to 109.04 yen in Tokyo morning trade from 108.95 yen in New York Wednesday, while it eased slightly to $1.3122 from $1.3128 in New York. The dollar edged down to 83.09 yen from 83.23.

The US market was also helped by the relatively positive data in the US Federal Reserve's Beige Book economic update from its 12 regional branches, released Wednesday afternoon.

The Fed report concluded that the US economy expanded "moderately" in November and December.

Japanese banks were higher following rises in their New York counterparts after Wells Fargo upgraded its assessment of the banking sector. Mitsubishi UFJ FG was up 1.52 percent at 465 and Mizuho FG up 1.8 percent at 171.

Nikon, which has heavy exposure to the eurozone, was up 2.30 percent at 1,867.

However, data showing that Japan's core private sector machinery orders slipped 3.0 percent in November on-month, missing forecasts of a 1.8 percent rise, prompted caution and capped gains, dealers said.

Machinery orders are a key indicator of corporate capital spending and the latest data reflected the impact of a strong yen and weak domestic demand on Japanese firms, said analysts.

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