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Nikkei ends at 7-month high as US inflation concerns ease

A person wearing a mask walks past an electronic stock board showing Japan's Nikkei 225 index at a securities firm on Aug. 15, 2022, in Tokyo. (AP Photo/Eugene Hoshiko)

TOKYO (Kyodo) -- Tokyo stocks rose Monday, with the benchmark Nikkei ending at a fresh seven-month high amid optimism that the rise in inflation in the United States has peaked, while upbeat earnings by some Japanese companies also provided support.

    The 225-issue Nikkei Stock Average ended up 324.80 points, or 1.14 percent, from Friday at 28,871.78, the highest since Jan. 5. The broader Topix index finished 11.78 points, or 0.6 percent, higher at 1,984.96.

    On the top-tier Prime Market, gainers were led by pharmaceutical, precision instrument, and rubber product issues.

    The U.S. dollar at one point fell to the lower 133 yen range on expectations that the Federal Reserve will slow the pace of interest rate hikes, but later came back to the mid-133 yen zone amid strong stocks, dealers said. The U.S. central bank has been aggressively lifting rates to keep inflation in check.

    At 5 p.m., the dollar fetched 133.51-53 yen compared with 133.56-66 yen in New York and 133.25-27 yen in Tokyo at 5 p.m. Friday.

    The euro was quoted at $1.0233-0235 and 136.62-66 yen against $1.0251-0261 and 136.88-98 yen in New York and $1.0296-0298 and 137.20-24 yen in Tokyo late Friday afternoon.

    The yield on the bellwether 10-year Japanese government bond was flat from Friday's close at 0.185 percent as earlier buying on long-term U.S. Treasury market moves late last week was offset by selling on the Tokyo stock market rise.

    Stocks drew buying after strong U.S. consumer confidence data in August, released before the weekend, helped eased inflation concerns in the world's largest economy, brokers said.

    "Investors were seriously concerned about a recession and prospects for high inflation in the United States. But a slew of recent data has shown that its economy remains strong," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

    "It is a favorable environment for the stock market," prompting investors to believe the Fed will slow interest rate hikes after September, Ichikawa added.

    The Tokyo market was also buoyed by stronger-than-expected earnings at some retailers.

    Pan Pacific International Holdings, the parent company of discount store operator Don Quijote Co., surged 248 yen, or 11.5 percent, to 2,408 yen. Sundrug rose 335 yen, or 10.8 percent, to 3,445 yen.

    Adding to the momentum, Daiichi Sankyo increased 534 yen, or 14.5 percent, to 4,211 yen. The pharmaceutical company said Saturday an arbitrator had ruled in favor of it in a patent battle with a U.S. biotechnology firm.

    Stocks also gained downside support from Japan's gross domestic product data released prior to the market open. The country's economy in the April-June period grew an annualized real 2.2 percent on recovering consumption after coronavirus restrictions were removed.

    Among Prime Market issues, declining issues outnumbered advancers 912 to 841, while 85 ended unchanged.

    Trading volume on the Prime Market fell to 994.60 million shares from Friday's 1,457.93 million.

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