Stocks rebound despite China's rate hike

Monday 27th December, 03:13 PM JST

TOKYO —

Tokyo stocks rebounded Monday, as strong investor sentiment toward the year-end prompted inflows into equities, with the market largely taking in stride China’s second interest rate hike in two months. In thin trading, the 225-issue Nikkei Stock Average gained 76.80 points from Friday to 10,355.99. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 3.02 points to 904.68.

Expectations that the recent rally would continue toward the year-end and into next year gave a lift to the market, with shares of major Japanese exporters trading generally higher despite the yen’s firmness against the dollar, brokers said.

The day’s gains came on relief that Shanghai shares, closely watched after China’s weekend decision to raise interest rates to tame inflation and ensure sustainable economic growth, traded in positive territory for most of the day.

‘‘For the Japanese stock market, how Chinese stocks perform is important, but more so is how Chinese economic conditions will be,’’ said Masatoshi Sato, senior strategist at Mizuho Investors Securities Co. ‘‘We had the rate hike, but it’s not as if the Chinese economy will slow, just because of it.’‘

Shares of companies with close business links to China gained, in a sign that the market had already expected another rate hike would come sooner or later.

The dollar traded in the upper 82 yen range, and the euro stayed in the upper 108 yen zone when the stock market closed.