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Nikkei tops 24,000 as economic optimism outweighs trade fears

But sluggish auto stocks hint at concern over possible US tariffs

The Nikkei Stock Average is nearing its year-to-date high from late January on optimism about the global economy.

TOKYO -- The Nikkei Stock Average rallied above the 24,000 mark on Wednesday for the first time since January, thanks to the continued strength of the world economy, but a poor showing by auto stocks hinted at uncertainty over the U.S.-Japan trade relationship.

The Japanese benchmark index closed the day on a high of 24,033.79, recovering from weakness early in the session. The index has gained 1,429 points over an eight-day winning streak and is nearing its top year-to-date close of 24,124.15.

Investors inside and outside Japan seem increasingly optimistic that a solid global economy will absorb much of the impact of trade tensions. The Dow Jones Industrial Average remains near record-high territory, and Chinese stocks have recovered recently as well.

Expectations that the U.S. Federal Reserve will raise interest rates early Thursday morning Japan time, putting upward pressure on the dollar against the yen, have also buoyed Japanese stocks.

The best-performing subindexes within the Nikkei average over the past month include industries with high exposure to the global economy -- such as shipbuilding and marine transport, which climbed 16% and 11%, respectively. The mining and petroleum subindexes also enjoyed double-digit gains thanks to a commodities rally.

But the subindex for the auto sector -- which remains at risk of U.S. tariffs -- advanced only 3%, lagging the 6% rise for the Nikkei average as a whole. It is unusual for automakers and parts manufacturers to underperform when the yen is weak, a trend that usually boosts the export-heavy industry.

Trade tensions between Washington and Beijing are escalating, and investors are having trouble predicting how U.S. President Donald Trump will approach his meeting early Thursday with Japanese Prime Minister Shinzo Abe, when trade is sure to be high on the agenda.

"It will be hard for stocks to really rally until concerns about trade friction clear up," said Kuninobu Takeuchi of Japan's Asset Management One.

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