Nikkei rebounds from 7-mth low as China gains soothe

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Japan's Nikkei rebounded from a seven-month low on Tuesday, rising 0.8 percent to close above a key retracement level as a rise in shares in China lifted sentiment in thin trade.The Nikkei had started down as a report about China's property market fuelled worries about the economic outlook, and the benchmark average fell as much as 1.9 percent.But a jump of more than 1 percent in shares in Shanghai and a reversal in the yen from early gains helped Japanese shares rebound, with exporters such as Canon Inc turning an early 2 percent loss into a 2 percent gain."A rise in Shanghai stocks and a pullback by the yen helped soothe market sentiment. Some investors also appeared to have bought back stocks with Japanese government bonds sagging today," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets."But a strong trend has struggled to emerge in Tokyo as trade has been thin as the United States was on holiday yesterday. The market will need stronger incentives to establish a clearer trend."The Nikkei closed up 71.26 points at 9,338.04.The broader Topix gained 1.2 percent to 847.24.Market players said with the settlement of Nikkei options approaching on Friday, trade was likely to be volatile.A large number of option triggers on Nikkei futures are said to lie at 9,000 and 8,500, and the market remains gamma short -- meaning traders need to follow market moves to hedge their books, often leading to volatile moves.On the charts the Nikkei pulled back above a support level at about 9,200, which is a 50 percent retracement of its move up from its March 2009 low to its April high.If it fails to hold onto its gains, the next chart support is seen at 9,076, a trough touched last November.Its slow stochastic -- a measure of how oversold the market is and whether it is in a short-term up or down trend -- has turned higher after falling in June.But the Nikkei's MACD, a measure of market momentum, continues to fall, and the benchmark has remained below the Ichimoku cloud on the daily charts since mid-May, signalling the trend remains bearish.The market fell in June as concerns about U.S. and Chinese growth prospects hurt investor sentiment.EXPORTERS REBOUND ON YEN, NTT DOCOMO UPComments from ex-IMF chief economist Kenneth Rogoff that China's property market is beginning a "collapse" that would hit banks lifted the yen early and hit shares of Japanese exporters.But the yen later retreated and exporters recovered.Tokyo Electron Ltd edged up 0.4 percent to 4,750 yen after going as low as 4,550 yen, while Canon Inc gained 2 percent to 3,350 yen. Honda Motor Co rose 2.2 percent to 2,566 yen after shedding as much as 1.6 percent.NTT DoCoMo rose 1.7 percent to 139,300 yen after Japan's biggest mobile phone operator said it plans to allow users to switch carriers without changing their handsets.ABC Mart Inc fell 2.4 percent to 3,290 yen after the shoe retailer said its June same-store sales declined 1.5 percent from a year earlier, the first drop in eight months, blaming bad weather for keeping shoppers at home.
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