TOKYO (Thomson Financial) - Japanese shares were higher in early trade on Wednesday as investors found solace in a weaker yen and bought back stocks after the Nikkei fell more than 460 points in the previous two sessions.
They looked past a mild decline on Wall Street after a set of weak data added to worries about the plight of the world's largest economy.
But uncertainty about local politics after the surprise resignation of Japanese Prime Minister Yasuo Fukuda on Monday may cap gains.
'With the popularity of Fukuda already low enough to provoke concerns ... and with Taro Aso being highly popular, the change of leadership will not yield any negative impact on the market,' Morningstar Japan KK analyst Hideyuki Suzuki said.
'But there are uncertainties about how foreign investors will react to it, as they normally dislike political turmoil,' he said.
In the U.S. on Tuesday, the Institute for Supply Management said its index on manufacturing activity eased to 49.9 in August from 50 in July. A reading below 50 suggests contraction.
Separately, the Commerce Department said construction spending declined 0.6 percent in July, double the 0.3 percent decrease analysts had expected.
The weak data more than offset a positive impact from falling oil prices after a barrel of U.S. light sweet crude oil for October delivery settled $5.75 lower at $109.71, or a near five-month low, in New York trading.
At 0027 GMT, the Nikkei 225 Stock Average was up 89.86 points or 0.7 percent at 12,699.33. The broader Topix had gained 7.77 points or 0.6 percent to 1,220.14.
Early gainers included the pulp and paper and rubber products sectors. Oji Paper Co was up 5.5 percent to 578 yen and major tyre maker Bridgestone Corp was up 3.4 percent at 1,910 yen.
But shares of Inpex Holdings shed 2.7 percent to 1.038 million yen, with investors showing little interest in news the Indonesian government was in talks with the Japanese oil explorer on the construction of the world's first offshore liquefied natural gas (LNG) terminal there.
($1=108.56 yen)
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