Weaker Yen Buoys Japan Stocks

Japan shares rose as the yen weakened slightly Tuesday, delivering relief to investors who are worried that a strong currency hampers efforts to boost the world's third-largest economy.

The Nikkei Stock Average jumped 1.1% as the yen pulled back from its recent gains versus the U.S. dollar. Stocks were on track to post the highest one-day gain since March 10, when the Nikkei Stock Average rose 1.3%. The yen was recently trading at 108.19 a dollar, falling from as strong as 107 a dollar.

In China, stocks slipped after the country's securities regulator said late Monday that it approved seven initial public offerings that are expected to raise a total 2.8 billion yuan ($433 million). Investors were selling stocks ahead of the offerings, on worries that an impending batch of new stock-sales would divert money from other shares. The Shanghai Composite Index fell 0.65%

Meanwhile, shares in other Asia markets edged higher. Investors took on risk as they became more optimistic that a slightly weaker yen against the U.S. dollar and an overnight uptick in oil and commodities prices could help revive growth in the region.

South Korea's Kospi was up 0.4% and Australia's S&P/ASX 200 rose 0.7%. Hong Kong's Hang Seng Index gained 0.2%.

The weaker yen gave relief to investors in Japanese stocks. Many had been betting that a weaker yen would boost exporters' earnings, in turn lifting wages and consumption to support the world's third-largest economy. The yen's rise in recent months has confounded analysts' previous forecasts and defied the wishes of Japan's central bank officials who are trying to weaken the currency in part by easing monetary policy.

A mix of factors has made the yen stronger recently. Investors have rushed to the traditional haven asset while global growth softens. The U.S. dollar has weakened relative to major currencies after the Federal Reserve slowed the pace of interest-rate increases this year, and some speculators who had earlier bet on the yen's weakness bought back the currency to cover short positions.

Still, a stock rebound in Japan might only have limited momentum as investors assume the yen will gradually strengthen again to as much as 105 per dollar, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"A slight rebound [in the yen] is giving the Japan market a little bit of strength," said Margaret Yang, market analyst for CMC Markets, based in Singapore. "I'm not sure how long this rebound is going to last, given the uncertain outlook of the yen."

Shares of Japanese steelmakers also gained as investors bet that the recent uptick in commodities prices would sustain a rebound. Nippon Steel & Sumitomo Metal Corp. shares jumped 6.7%.

The weaker dollar buoyed sentiment around oil- and commodities-related stocks in the Asia-Pacific region. Energy and mining shares rose in Hong Kong and Australian markets.

Brent crude surged overnight but gave up some gains in Asian trading hours to last trade at $42.70 per barrel.

Yifan Xie, Mayumi Negishi and Hiroyuki Kachi contributed to this article.

Write to Dominique Fong at Dominique.Fong@wsj.com

(END) Dow Jones Newswires

April 12, 2016 02:15 ET (06:15 GMT)

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