Tuesday, March 19 07:36:50
Japan's Nikkei average rebounded 2 percent today, regaining some ground lost in the previous session as fears receded that a controversial bailout proposal for Cyprus could reignite the euro zone crisis.
Analysts said that the disruption to the Japanese market from the unusual bailout plan for Cyprus seems to have run its course, although the Japanese equities market is prone to volatility because it is vulnerable to a rise in the yen when global market uncertainty increases.
"It looks like the bailout issue will be contained in Cyprus itself and it probably won't spread to the euro zone. As the Japanese market was rallying lately, Monday's selling served as a good opportunity for correction," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "But European debt issues will likely take years to be resolved, and we need to be prepared for a sell-off like this again as the Japanese market could easily get hit by a strong yen when investors buy the yen."
The Nikkei added 247.60 points to 12,468.23 after sliding 2.7 percent on Monday, its biggest one-day drop in 10 months. The index is just 0.74 percent away from a 4-1/2 year high of 12,560.95 marked last Friday.
Ahead of a parliamentary vote in Cyprus that will either secure the island's financial rescue or threaten default, euro zone ministers have urged Cyprus to let smaller savers escape a controversial levy on bank deposits.
Still, investors are concerned that forcing ordinary citizens to fund bank rescues up front, through a tax on deposits, is setting a precedent that could lead to other bailout countries imposing something similar on depositors. Today, Monday losers such as exporters and financials were bought back. Sony Corp surged 6.8 percent and was the most-traded on the main board by turnover. Mazda Motor Corp jumped 5.6 percent and Nikon Corp rose 3.4 percent. (C) Reuters