Japan surges in holiday-thinned Asia trade

SYDNEY (MarketWatch) � Japanese shares soared in holiday-thinned trading Tuesday, after the country�s economics minister said share prices are too cheap and the yen hit a fresh multiyear low.

Fresh from a three-day weekend, investors pushed Japan�s Nikkei Stock Average JP:100000018 �1.9% higher by the close, with the index retaining its grip on levels last seen in late 2008.

�Japanese yen weakness and Nikkei [Average] outperformance were dominant themes after the return of Japanese markets from their respective market holidays ... and after Economics Minister Amari�s weekend comments that the government will step up its efforts to revive the economy,� said RBC Capital Markets strategist Sue Trinh.

Akira Amari said that he wanted to see policy steps from the Japanese government to help stock prices rise.

�It will be important to show our mettle to see the Nikkei [Average] reaches 13,000 points by the end of the fiscal year� on March 31, Amari was quoted as saying by Kyodo News.

Such a rise would represent a 14% climb from Tuesday�s 11,369 closing level. Read: Japan�s economy minister bullish on Japanese stocks

Amari made similar comments Tuesday, saying stock prices were too low compared to fundamentals and that the government would seek to redress this situation, according to reports.

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As stocks soared, the dollar USDJPY �rose against the yen on Tuesday, buying �93.93 � up from �93.42 in late North American trading Monday � and marking its highest level since May 2010.

Companies exposed to currency moves and trading higher on Tuesday included Toshiba Corp. JP:6502 �TOSYY , up 2.9%; and Bridgestone Corp. JP:5108 � BRDCY , which rose 3.2%.

Bucking the trend, however, Nissan Motor Co. JP:7201 � NSANY �fell 3.8% after reporting that its October-December profit fell by more than a third. Read: Nissan Q3 net off; confident about full year

Dentsu Inc. JP:4324 �DNTUY �jumped 10.5%, however, after the advertising firm reported a 24% jump in nine-month profit.

Financial-sector margins stand to benefit if the government succeeds in introducing policies that bring inflation to the Japanese economy, and the sector rallied on Tuesday.

Mizuho Financial Group Inc. JP:8411 � MFG �climbed 4.8%, Nomura Holdings Inc. JP:8604 � NRSCF � rose 5.5%, and Daiwa Securities Group Inc. JP:8601 � DSECF �advanced 4%.

Rest of Asia quiet

Many other Asian markets remained closed for the Lunar New Year, including those in Hong Kong, Shanghai, Shenzhen and Taipei.

South Korea � where investors were also returning from holiday � came under pressure after the South Korean Defense Ministry reportedly said a tremor detected in North Korea appeared to be a nuclear test. Read: North Korea conducts nuclear-weapon test: reports

The RBC�s Trinh said �a risk-off bias was evident� in the markets after reports of the North Korean seismic activity.

The benchmark Kospi KR:SEU �edged down 0.3%, with utilities among the worst performers, as Korea Gas Corp. KR:036460 �fell 2.2%, and Korea Electric Power Corp. KR:015760 �declined 2.4%.

Australia�s S&P/ASX 200 index AU:XJO �ended flat, with lending giant Commonwealth Bank of Australia AU:CBA �CBAUF �gaining 0.6% ahead of its earnings due out Wednesday.

Bradken Ltd. AU:BKN �climbed 11% after the engineering firm reported an 8.5% increase in first-half net profit on Tuesday.

U.S. markets ended with marginal losses on Monday, pulling back after a recent rally, with energy stocks underperforming. Read: Stocks end lower on year�s lightest volume