Nikkei hits 7 month closing high despite Elpida bankruptcy

Japan\'s Nikkei average hit a fresh seven-month closing high yesterday as investors reassessed the impact of Elpida Memory Inc\'s bankruptcy protection filing on the chip sector and bought back some of the stocks they sold earlier in the day. A softer yen, month-end buying and the launch of several new investment trust funds, which is set for today, also helped reverse earlier losses on the Nikkei, a dealer said. Buoyed by a run of strong US economic data, the European Central Bank\'s nearly half a trillion euro liquidity injection, and further easing steps by the Bank of Japan and the Bank of England, the Nikkei is up 10.5 per cent this month, on track for its best February performance since 1991. The benchmark Nikkei closed 0.9 per cent higher at 9,722.52 after trading as low as 9,528.77 in the morning session. \"The Elpida news triggered a lot of negative sentiment. People ran for cover but they realised they were overselling in names which are unrelated, or names which shouldn\'t have gone that far. They bought back in the afternoon session,\" another trader said. Elpida, Japan\'s last remaining maker of PC chips, filed for protection from creditors after the bell on Monday with $5.6 billion (Dh20.56 billion) in debt after failing to find partners to help its revival. The company\'s bankruptcy filing, the biggest by a Japanese manufacturer, triggered a broad sell-off in its chip-related shares before investors cut their losses in the afternoon. Advantest Corp ended down 1.5 per cent after falling as much as 8.3 per cent earlier in the day, while Shin-Etsu Chemical Co dropped 1.3 per cent. Tokyo Electron reversed earlier losses to close 1 per cent higher. Elpida was down by its daily limit of 80 yen or 24 per cent from the previous session at 254 yen. The broader Topix was up 0.4 per cent at 838.48. Nearly 2.51 billion shares changed hands on the main board, up from 2.49 billion shares in the previous session. Investors will focus on the size of the ECB\'s longer term refinancing operation gross allotment today, as well as net new liquidity. A Reuters poll showed 30 euro money market traders expected the ECB to allot €500 billion (Dh2.46 trillion). \"The market was certainly overheated so this is a natural correction. Domestic investors are prompted to take profits right above the current levels ... There is no reason at this moment to buy higher,\" said Yutaka Miura, a senior technical analyst at Mizuho Securities. From gulfnews