Tokyo stocks up on growing expectations for solid corporate earnings

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Tokyo stocks rose Wednesday on an improving market view for the U.S. and Japanese economic outlooks and growing expectations for solid earnings reports to be released by Japanese companies.

The 225-issue Nikkei Stock Average gained 139.88 points, or 0.80 percent, on the day to 17,667.33. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 14.60 points, or 0.85 percent, to 1,730.71.

The key Nikkei index started the day with a mild rise and climbed further with investors snapping up laggards and recent losers, taking a cue from the upbeat Dow in New York which briefly rose above its record closing high.

Extending its winning streak to the fourth consecutive day, the Dow Jones Industrial Average finished at 12,773.04 Tuesday, after briefly eclipsing its record closing high of 12,790 set Feb. 20.

Brokers said investors were also encouraged to buy stocks after U.S. Labor Department data released Tuesday showed a lower-than-expected core consumer price index for March which propped up speculation that the Federal Reserve may cut its key interest rate.

''Market sentiment has been improving following U.S. and some Asian stocks' recoveries and rises to record highs,'' said Yuya Yamaguchi, manager of the equity marketing department of Daiwa Securities SMBC Co.

''Japanese equities, too, have been moving up on those outside factors, as well as persistent expectations for solid corporate earnings reports for fiscal 2006 which would underline their performances,'' he said.

Kenichi Azuma, equity strategist at Cosmo Securities Co., said, ''Investors thought laggards were at reasonable prices amid growing expectations of upbeat earnings reports.''

But the Nikkei failed to stay firmly above 17,700 after crossing the line at midmorning. It moved narrowly at slightly below the line in the afternoon as more investors took to the sidelines ahead of Japanese firms' annual earnings reports season that kicks off next week.

''Some investors fear companies may show only modest earnings outlooks for fiscal 2007, which may spark selling of stocks,'' Azuma added.