Tokyo, Jan 25 (bdnews24.com/Reuters) - Japanese shares surged more than 4 percent on Friday to their biggest one-day gain in nearly six years, lifted by short-covering on growing confidence that a US tax rebate and bond insurer rescue will have a positive impact.
Banks in particular surged, with No. 2 bank Mizuho Financial Group up 10.89 percent, its biggest one-day gain since September 2003. Nonlife insurers such as Millea Holdings also jumped.
A weaker yen against the dollar boosted Nissan Motor Corp and other blue-chip exporters.
In three consecutive positive days the Nikkei has recouped 7 percent of its losses for this year, though it still is down roughly 11 percent. On Tuesday it had its biggest one-day loss since the session just after the Sept. 11, 2001 attacks in the United States.
The benchmark Nikkei closed up 4.1 percent and the broader TOPIX finished up 4.7 percent, both marking their biggest one-day gains since March 4, 2002 -- when both surged on a government crackdown on short sellers.
"There's a sense that the US is taking prompt measures to deal with the situation now, in a way that they didn't with the subprime mortgage crisis," said Takashi Ushio, head of the investment strategy division at Marusan Securities.
"The market rise is a reflection of the speed of these measures and also an expectation that US shares will continue to rise later today."
A large part of Friday's gains were based on news that troubled US bond insurer Ambac andbillionaire Wilbur Ross are in serious talks about Ross taking over Ambac Financial Group Inc , according to a report in the UK's Evening Standard on Thursday
This, combined with growing expectations of a rescue plan for US bond insurers and an agreement between Congress and the White House for an economic stimulus plan that would give 117 million US families a tax rebate, helped propel shares higher.
"The Ambac news has reassured banks, which have risen much more than expected, in turn driving the rest of the market higher than expected," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
He added that he felt the sharp sell-off earlier this week was largely due to concerns about Ambac and its peers so a rebound on the news was only natural.
Additional upward impetus came from gains in Hong Kong and Indian shares. At 0635 GMT, the MSCI index of Asian stocks excluding Japan was up 4.7 percent.
RISING ACROSS THE BOARD
Some market players remained wary, noting that expectations of Wall Street rises have been betrayed before and that a number of key events lie ahead next week, including a Federal Reserve meeting.
But virtually all of the Nikkei subindexes gained. Banks rose sharply. Mizuho Financial Group was up 10.89 percent at 509,000 yen, industry leader Mitsubishi UFJ Financial Group rose 7.9 percent to 1,040 yen and Sumitomo Mitsui Financial Group was up 8.9 percent at 844,000 yen. Sojitz and other trading houses rose after hefty overnight gains in copper and other nonferrous metals, while the yen's fall against the dollar -- it was trading at around 107.49 yen late in Tokyo -- boosted exporters.
Hitachi rose 5.7 percent to 756 yen and Canon Inc gained 6.8 percent to 4,860 yen.
High-tech shares did well in line with their US cohorts, boosted after the world's top cellphone maker Nokia beat expectations thanks to demand in emerging markets, with Nokia parts suppliers such as connector maker Hirose Electric Co Ltd doing especially well.
Mitsumi Electric Co Ltd and other electronics makers supplying parts for Nintendo Co Ltd's game machines gained ground after the videogame maker on Thursday raised its sales forecasts for its hot-selling Wii and DS machines.
Trade was moderate, with some 2.61 billion shares changing hands on the Tokyo exchange's first section compared to last week's average of 2.76 billion.
Advancers outnumbered decliners by roughly 20 to one.
bdnews24.com/aj/1516 hrs.
