Tokyo shares rallied 1.94 per cent on Friday, rebounding from a massive sell-off in the previous session stoked by a surging yen and jitters over an end to central bank stimulus.
The benchmark Nikkei 225 index closed up 241.14 points to 12,686.52, although gains were pared after jumping about 3.50 per cent in earlier trade. The index lost 6.35 per cent on Thursday.
The Topix index of all first-section shares closed up 1.18 per cent, or 12.28 points, at 1,056.45.
Thursday’s precipitous drop was largely attributed to investor worries over an end to stimulus, particularly the US Federal Reserve’s huge monetary easing, which has been credited with propping up global equity markets.
The Nikkei had been up about 80 per cent from mid-November levels, peaking around 15,600 in late May as foreign investors jumped into the market on the back of a plan by Japanese Prime Minister Shinzo Abe to stoke the world’s third-largest economy.
Dubbed Abenomics, the policy prescription of big government spending and aggressive central bank easing pushed down the yen and sent stocks soaring.
Doubts have begun to emerge over the plan, however, with weeks of wild volatility on Japan’s premier bourse shaving about 20 per cent off one of the world’s best-performing indexes. The Nikkei is still more than 40 per cent above its levels in mid-November.
In Tokyo, mobile carrier SoftBank gained 1.20 per cent to 5,040 yen while Uniqlo clothing chain operator Fast Retailing gained 1.36 per cent to 28,940 yen.
Major exporters ended mixed. Electronics giant Sony slipped 0.36 per cent to 1,923 yen and Sharp was down 0.23 per cent at 417 yen. Automaker Nissan rose 0.71 per cent to 986 yen while Toyota closed unchanged at 5,590 yen.
Kawasaki Heavy Industries – which makes everything from trains to parts for power plants but is best known for its motorcycles – rose 4.24 per cent to 319 yen.
The firm’s board unexpectedly dismissed its president, who was pushing for a possible merger with a rival firm, a rare coup d’etat in corporate Japan.
On currency markets, the greenback see-sawed around the 95 yen level for most of Friday’s session, weakening from 95.31 late Thursday in New York, but stronger than 94.64 yen seen in Tokyo on Thursday.
A cheaper yen benefits Japanese exporters by making them more competitive overseas and tends to push up Tokyo stocks.