TOKYO (Thomson Financial) - Japanese shares eliminated opening losses and rallied into positive territory by mid-morning on Thursday as investors hunted for bargain stocks.
'As the market has priced in most conceivable negative trading leads, investors seemed to have started to feel that there is no strong lead to dump the stock market any further,' Nozomi Securities market analyst Akihiro Shiroeda said.
'But apparently, they have no interest in chasing the market sharply higher just for the valuation reason,' he said.
But the local market remained top heavy due to lingering concerns about the U.S. economy after a government report on retail sales and a jump in oil prices.
The Commerce Department said retail sales slipped 0.1 percent as rising prices helped offset the effect of economic stimulus payments to U.S. households. Wall Street had expected sales to remain flat.
The report followed a warning from department store bellwether Macys Inc that its full-year profits would fall short of expectations because of slower sales.
Light, sweet crude rose $2.99 to $116.00 a barrel on the New York Mercantile Exchange, adding to the anxiety about consumer spending in the United States.
'Rising inflation can easily weaken the purchasing power of households and add downward pressure on the economy not only in Japan but also in the United States,' Societe Generale Asset Management senior economist Akio Yoshino said.
In addition, Japanese investors remained wary about the emerging economic recession and its impact on the corporate sector after property developer Urban Corp on Wednesday filed for court protection with debt of 255.8 billion yen ($2.4 billion), making it the biggest failure by a listed Japanese company since March 2002.
'Investors have shifted their attention to the economy from financial system woes as the recent data shows that Japanese companies are faced with growing difficulties in hiking prices due to weakening private demand, which strengthens fears about more downside risks to corporate profits,' Yoshino said.
At 0110 GMT, the benchmark Nikkei 225 Stock Average was up 32.62 points or 0.2 percent at 13,055.67, while the broader Topix index was up 2.55 points or 0.2 percent at 1,249.03.
The marine transportation sector led the gains, with Nippon Yusen KK rising 2.7 percent to 883 and Mitsui OSK Lines Ltd up 4.4 percent at 1,290.
But the real estate sector was the hardest hit following the collapse of Urban, with Mitsubishi Estate Co down 2.0 percent at 2,380 yen and Mitsui Fudosan off 1.5 percent at 2,285 yen.
Urban Corp was sell indication only at 32 yen, compared to yesterday's closing price of 62 yen.
($1=109.29 yen)
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