Nikkei surges to 11-week high after trade worries ease

  • Reuters
  • Stock Market News
Nikkei surges to 11-week high after trade worries ease

* Nikkei briefly touches 23,000 level

* Auto-parts makers soar

By Ayai Tomisawa

TOKYO, Aug 28 (Reuters) - Japan's Nikkei surged to 11-week highs on Tuesday morning after a trade agreement reached between the United States and Mexico lifted investor risk sentiment and triggered buying in automakers.

The Nikkei share average .N225 rose 0.6 percent to 22,944.77 at the midday break, after briefly touching the 23,000 level.

The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact. are relieved on receding trade worries but there are several other factors in the U.S. that are raising sentiment for the Japanese market," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.

"The U.S. economy is strong, its corporate earnings are bright while inflation is under control, so the environment is favourable for risky asset investors."

He said one concern is that trading volume and turnover have been thin in the Japanese market, even though hedge funds are seen buying back Japanese stocks that they sold a few weeks ago.

"Unless trade becomes more active, the Nikkei is unlikely to rise and stay above 23,000," Fujito said.

Shares in Japan's top three automakers, which have plants in Mexico, surged on Tuesday. Toyota Motor Co 7203.T advanced 1.9 percent, Nissan Motor Co 7201.T soared 2.2 percent and Honda Motor Co 7267.T rose 2.3 percent.

Autoparts makers followed suit, with Denso Corp 6902.T up 3.3 percent, Aisin Seiki 7259.T gaining 2.4 percent, and Jtekt Corp 6473.T rising 2.5 percent.

Investors also took heart from news that the Toyota group of companies said they would form a joint venture to develop software that manages brakes, steering and other components for automated driving. broader Topix .TOPX gained 0.7 percent to 1,740.36.

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