* Nikkei gains on short-covering; exporters recoup ground
* Next target lies around 9,590, then 9,700-analysts
* Support seen solid at around 9,200, 9,000
* MACD starts to pick up; slow stochastic climbs
By Aiko Hayashi and Shinichi Saoshiro
Japan's Nikkei average jumped 2.8 percent on Thursday, after
a bullish forecast from U.S. financial firm State Street <STT.N>
raised optimism ahead of the earnings season and helped soothe
sentiment bruised by recent fears of a slowdown in the global
economy.
State Street said its quarterly earnings would far exceed
expectations, providing a lifeline for investors after weeks of
dismal economic reports. U.S. jobs data last week and further
strengthening in the yen had hit market sentiment and exacerbated
a bearish trend for the Nikkei since April.
U.S. earnings begin in earnest next week with Alcoa Inc
<AA.N> on Monday, and Japan's reporting season gets into full
swing later this month.
"This is a reaction to the market being very oversold. There
were very few reasons to sell the index off to 9,000. There are
vague worries about the economic outlook but at least for now
corporate earnings appear to be on a solid footing," said Mitsuo
Shimizu, deputy general manager at Cosmo Securities.
The benchmark Nikkei <> gained 256.09 points to
9,535.74, buoyed by short-covering from investors who believe the
benchmark's slide to a seven-month low this week was overdone.
The broader Topix <> advanced 2.3 percent to 861.02.
"Whether the Nikkei can continue rising towards the 10,000
threshold partially depends on whether U.S. earnings are upbeat
when they are released next week," said Yumi Nishimura, deputy
general manager at Daiwa Securities Capital Markets.
The Nikkei fell the previous day but remained above the key
support level of 9,200, which is a 50 percent retracement of its
move up from its March 2009 low to its April 2010 high.
On Tuesday, the Nikkei slid as low as 9,091.70, just above
the November 2009 low of 9,076 and the July 2009 low of 9,050.
The Nikkei has tested 9,000 three times recently, making the
level strong support, market players say.
Market players said the Nikkei's next immediate upward target
now lies around 9,590, a 38.2 percent retracement of its move
down from its June 21 close to the July 1 close.
Another upward target stands around 9,700, or its 25-day
moving average, which is a proxy for a one-month moving average
that is keenly watched in Japan.
On the charts, the outlook for the Nikkei appears to be
brightening. Its MACD, a measure of market momentum, has started
to pick up, while 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, moving
away from oversold territory.
Mitsubishi UFJ Financial Group <8306.T> and other banks
climbed after their U.S. counterparts gained following the
bullish forecast from State Street.
Mitsubishi UFJ Financial Group climbed 3.4 percent to 428
yen, and Sumitomo Mitsui Financial Group <8316.T> advanced 3
percent to 2,679 yen.
Shares of exporters rose, helped as the yen pulled back to a
two-week low versus the euro <EURJPY=R>.
Chip-tester maker Advantest Corp <6857.T> surged 6 percent to
1,881 yen and chip gear manufacturer Tokyo Electron <8035.T>
climbed 5.2 percent to 4,900 yen. Honda Motor Co <7267.T> rose
3.7 percent to 2,616 yen.
Kirin Holdings <2503.T> gained 2.6 percent to 1,147 yen after
the Nikkei business daily reported that the beer maker is likely
to post a 32 percent jump in first-half operating profit to 53
billion yen, which would be 3 billion yen more than the company
had estimated thanks to cost cuts.
Trade was light, with some 1.64 billion shares changing hands
on the Tokyo exchange's first section, not too far from the
four-month low marked last Monday.
Advancing stocks outnumbered declining ones by nearly 9 to 1.
U.S. stocks jumped about 3 percent, led by bank stocks. State
Street shares closed 9.9 percent higher. []
($1=87.75 Yen)
(Editing by Joseph Radford)
