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Tokyo's Nikkei index ends 3% higher on British tax cut plan reversal

This file photo shows the Tokyo Stock Exchange. (Mainichi)

TOKYO (Kyodo) -- Tokyo stocks ended sharply higher Tuesday, with the Nikkei index surging nearly 3 percent, as sentiment was boosted by the British government's announcement that it will scrap a controversial tax cut that triggered turmoil in financial markets.

    The 225-issue Nikkei Stock Average rose 776.42 points, or 2.96 percent, from Monday to 26,992.21. The broader Topix index was up 59.31 points, or 3.21 percent, at 1,906.89.

    Every industry category gained ground on the top-tier Prime Market, led by wholesale trade, mining, and oil and coal product issues.

    The U.S. dollar firmed to the upper 144 yen range in Tokyo after domestic importers sold the Japanese currency for the U.S. unit, and dollar buying was prompted by increased risk appetite following a sharp rise in Japanese stocks, dealers said.

    At 5 p.m., the dollar fetched 144.65-67 yen compared with 144.53-63 yen in New York and 145.02-04 yen in Tokyo at 5 p.m. Monday.

    The euro was quoted at $0.0.9874-0976 and 142.83-87 yen against $0.9818-0.9828 and 142.06-16 yen in New York and $0.9811-0.9812 and 142.28-32 yen in Tokyo late Monday afternoon.

    The yield on the bellwether 10-year Japanese government bond inched down 0.015 percentage point from Monday's close to 0.225 percent as worries eased over the possibility of the U.S. Federal Reserve continuing to pursue aggressive interest rate hikes.

    It tracked an overnight fall in U.S. Treasury yields after U.S. manufacturing data from the Institute for Supply Management came in weaker than market expectations.

    Stocks surged from the start of regular trading, tracking strong overnight advances on all three main Wall Street indexes. The benchmark extended gains in the afternoon to rise nearly 800 points following a climb in U.S. stock futures.

    Sentiment was also lifted by the British government's announcement Monday to reverse a controversial tax cut for the country's highest earners, alleviating concerns for its finances and lifting stocks across European markets.

    The government's economic plan had caused turmoil and spurred the British pound to drop further against the U.S. dollar.

    "The reports provided relief to investors, but effects are likely to be temporary as inflation is not expected to abate soon, while Tokyo stocks have surged quite rapidly," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

    Meanwhile, the market's reaction to North Korea firing a ballistic missile, the first it has sent across the Japanese archipelago in nearly five years, in the morning was limited, analysts said.

    Among Prime Market issues, advancers outnumbered decliners 1,777 to 52, while 7 ended the day unchanged.

    Energy-related shares were buoyed by a rise in crude oil futures during New York trading following reports that the Organization of the Petroleum Exporting Countries and its allies were considering cutting production by 1 million barrels per day.

    Oil explorer Inpex added 75 yen, or 5.4 percent, to 1,475 yen, and refiner Eneos Holdings gained 19.0 yen, or 4.0 percent, to 494.8 yen.

    Department store issues were notably higher after sales in September improved across all major operators from a year earlier due to a loosening of COVID-19 restrictions, with sentiment further supported by hopes of additional profits from inbound travelers to Japan.

    The government will remove its cap of 50,000 daily arrivals on Oct. 11 as part of its easing of coronavirus border controls and resume individual visa-free trips into the country.

    Isetan Mitsukoshi Holdings advanced 46 yen, or 3.9 percent, to 1,240 yen, and Takashimaya was up 53 yen, or 3.2 percent, at 1,726 yen.

    Itochu jumped 297 yen, or 8.3 percent, to 3,859 yen, after the trading house on Tuesday revised upward its net profit outlook for the business year through March and announced it would buy back up to 35 billion yen ($242 million) worth of shares.

    Trading volume on the Prime Market rose to 1,378.66 million shares from Monday's 1,269.34 million.

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