Reply #18: Nikkei rises, but Citi euphoria seen limited

[Ghost Dog]

Tue Nov 25, 2008 1:44am EST TOKYO, Nov 25 (Reuters) - Japan's Nikkei average was up 5.2 percent on Tuesday, its biggest one-day gain in two weeks, but further gains were limited as investors worried how long euphoria over a Citigroup (C.N: Quote, Profile, Research, Stock Buzz) bailout would last. Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) and other banks were boosted by the massive Citigroup bailout and subsequent Wall Street rally, but some profit-taking capped gains as the yen crept higher against the dollar.

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"Though U.S. shares may rise a bit more, these gains are likely to be limited by concern about more bad indicators that will show the poor state of the economy," said Yutaka Miura, senior technical analyst at Shinko Securities. "As for Citi, they just injected funds in October, so this raises the possibility that other places may need more funds, too, even as the economy worsens."

Other market players echoed this, saying that the impact of the Citi news was limited at best for Japan and it was doubtful how long Wall Street's rise -- which has seen the Dow Jones industrial average .DJI post nearly $900 of gains in two trading days -- will last.

"Will the government really go and help every firm that gets into trouble?" said Masayoshi Okamoto. "It seems pretty clear that the United States is heading for deflation, which is likely to hit banks hard. And if the U.S. goes into deflation, so will the world."

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The benchmark Nikkei gained 413.14 points to 8,323.93 after earlier rising to 8,356.83, while the broader Topix .TOPX rose 3.6 percent to 831.58.

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Canon (7751.T: Quote, Profile, Research, Stock Buzz) was one of the best performing exporters, rising 7.8 percent to 2,905 yen even after President Tsuneji Uchida told Reuters that the digital camera market may contract next year .

Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz) climbed 7.2 percent to 2,090 yen, as investors shrugged off Honda's plan to build fewer cars in Japan, Europe and North America -- a reflection of an increasingly bleak outlook for sales as the global economic crisis discourages big-ticket purchases.

Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz) gained 11.5 percent to 340,000 yen and Mizuho Financial Group rose 9.2 percent to 247,700 yen. Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) gained 2.9 percent to 506 yen.

Trade picked up slightly, with 2.15 billion shares traded on the Tokyo exchange's first section compared to last week's daily average of 2.1 billion.

/... http://www.reuters.com/article/marketsNews/idCAT6911120...