Nikkei rallies in early trading after previous day plunge

May 23, 2013 at 11:41 PM
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TOKYO, May 23 (UPI) -- Stocks rallied in Japan early Friday after the previous day's rout with the Nikkei-225 index gaining more than 3 percent to again top the 15,000 mark.

The index, which fell more than 7 percent or 1,140 points Thursday for the 11th-largest loss ever, had recouped more than 520 points after the Tokyo Stock Exchange opened Friday to trade above the 15,000 mark, reported.

Investors were encouraged after Wall Street largely ignored Thursday's outcome on other exchanges around the world and ended the session with minor losses. Strong housing and employment data in the United States also bright back the rally Friday.

Thursday's plunge in Japan was seen as largely due to manufacturing slowdown in China and concerns that U.S. Federal Reserve

Federal Reserve may begin to rein in its stimulus measures.

"What we have seen is investors taking profits off the table and reducing some of their exposures to protect their portfolio in case the move we [saw Thursday] is a precursor to a broader market correction," said Joshua Raymond, chief market strategist at City Index, told CNNMoney.

Japanese investors, encouraged also by the falling yen, which helps boost exports, have been on a buying binge in recent days, pushing the Nikkei to its highest levels in more than five years. Japan's own bold and aggressive measures to spur the economy, mired in deflation for years, have further encouraged investors to buy stocks of exporters with the U.S. dollar trading above the 102-yen mark lately.

But the flood of cheap money also has raised concerns among some investors that it could eventually push interest rates up.

Kyodo News, reporting on Thursday's huge drop, said brokers took note of U.S. Federal Reserve Chairman Ben Bernanke's Congressional testimony in which he said the Fed may taper off its credit easing "in the next few (policy) meetings" if the employment situation improved.

The stock losses also came when the yield on 10-year government bonds rose briefly Thursday.

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