Tokyo shares up as yen weakens

Tokyo stocks closed higher Friday, with exporters boosted by a drop in the yen to three-month lows, while traders shrugged off another slack inflation reading.

With bets increasing that the US Federal Reserve will hike interest rates by the end of the year, the dollar broke through the 105 yen mark in New York on Thursday and extended its gains in Tokyo.

“The weaker yen is a boost for Japanese stocks,” Yutaka Miura, a senior technical analyst at Mizuho Securities Co, told Bloomberg News.

The benchmark Nikkei 225 index rose 0.63 percent, or 109.99 points, to 17,446.41. Over the week, it gained 1.52 percent.

The Topix index of all first-section issues was up 0.75 percent, or 10.40 points, to 1,392.41. It jumped 1.99 percent from a week earlier.

A weak yen lifts exporters’ business outlook as it bumps up their repatriated income and boosts sales by making their products more competitive overseas.

The greenback was trading at 105.39 yen on Friday afternoon against 105.20 yen in New York late Thursday and well up from the 104.60 yen level seen in Asia earlier Thursday.

Official data released Friday showed Japanese consumer prices fell for a seventh straight month in September, in a fresh blow to the government and Bank of Japan as they try to kickstart inflation.

Also, household spending shrank 2.1 percent on-year last month, although that was marginally better than expectations.

Dealers are now awaiting the release later in the day of US third-quarter economic growth figures, with a strong reading likely to reinforce expectations for a December rate hike.

Exporters were broadly higher in Tokyo. Canon rebounded 1.01 percent to close at 2,991.5 yen after two days of losses since the copier and camera maker slashed its annual profit outlook.

Nissan rose 1.64 percent to 1,051.5 yen after the Nikkei business daily reported that the automaker planned to sell its 41.6 percent stake in auto parts maker Calsonic Kansei to US investment firm Kohlberg Kravis Roberts.

Nissan also announced Thursday it would further invest in its plant in Britain despite the country’s shock decision in June to leave the European Union.

Financial stocks gained ground as worries over the sector receded with a surprise July-September profit report from German giant Deutsche Bank.

Sumitomo Mitsui Financial Group climbed 2.31 percent to 3,619 yen while Mitsubishi UFJ Financial Group gained 1.72 percent to 543.9 yen.