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Nikkei surges to 14-month high on trade boost; chip sector shines

13 Dec 2019 / 10:51 H.

TOKYO: Japan's Nikkei share average jumped to a 14-month high on Friday, with semi-conductor-related shares extending their rally, after sources said Washington and Beijing had reached a trade deal in principle.

The Nikkei 225 index surged 2.28% to 23,954.99, hitting its highest levels since October last year.

The index made a decisive break above a resistance around 23,600. Its next target is seen at 24,448, a 27-year peak marked on Oct. 2 last year.

The broader Topix also gained 1.59% to 1,740.00, with 86% of shares in the positive territory.

The United States has also agreed to suspend some tariffs on Chinese goods and reduce others, sources said, in return for Beijing's pledge to hike purchases of U.S. farm products in 2020.

"Markets weren't expecting the U.S. to reduce the existing tariffs, so if that is true, that would be an additional surprise," said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

Chip-related shares, which have risen in recent weeks on signs of a bottoming-out of the highly volatile technology sector, climbed further on the trade news.

Tokyo Electron jumped 4.4%, while TDK Corp added 4.1%, Taiyo Yuden gained 4.3% and Shin-etsu Chemical advanced 3.9%.

Other sectors that are seen sensitive to U.S-China trade war such as metal companies and shippers also enjoyed a boost.

Non-ferrous metal sector index rose 2.7%, with Sumitomo Metal up 3.8%, while shipping companies went up 2.6%.

Insurers and banks also spiked as trade headlines lifted U.S. long-term bond yields, which would increase their interest income in the future.

Insurer index rose 2.4% and banking sector index gained 2.3%.

Tokio Marine rose 2.3% to a record high, while Dai-ichi Life gained 3.4%.

The country's top three bank groups — Mitsubishi UFJ , Sumitomo Mitsui Financial Group and Mizuho — rose about 2%.

Chip-making equipment maker NuFlare Technology gained 9.5% after Hoya Corp announced a counter-bid for the firm. Toshiba Corp owns 52.4% of NuFlare and has said it hopes to buy the rest of the company in a corporate restructuring.

Kura Sushi dropped 4.5% after the sushi restaurant chain operator reported a larger-than-expected fall in earnings in the financial year ended in October and gave a soft guidance for the current year. - Reuters

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