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Stocks

Investors returning to resource-tied stocks in Tokyo

TOKYO -- Trading houses, maritime shipping companies and other resource-related issues are staging a recovery in the Tokyo market amid waning concerns over emerging economies and growing hopes that crude oil prices have bottomed out.

     Share prices in Japan are lagging behind those in other major economies. The Nikkei Stock Average ended up 1.9% at 17,048 on Tuesday, but still remains 10% lower than at the end of last year. The Dow Jones Industrial Average, meanwhile, ended up for the seventh straight session on Monday at 17,623, slightly above the level from the end of last year.

     Investors are slowly noticing an opportunity here. Oil and gas explorer Inpex, steelmaker JFE Holdings, construction equipment maker Komatsu and other issues linked to the resource industry have seen some of the biggest gains since the end of February among components of the Topix 100 index for large-capitalization stocks.

     Investors unloaded these stocks through mid-February, but are returning to them as the recovery in crude oil prices allays concerns over a further plunge in the companies' earnings. Trading house Toyota Tsusho rose 3% Tuesday, while maritime shipper Mitsui O.S.K. Lines jumped 4%.

     The price of the near-term futures contract for West Texas Intermediate crude rebounded to the $40 per barrel range Thursday for the first time in three and a half months, bouncing back from its recent low around $26 in mid-February. Even in the U.S., oil titan Chevron and construction machinery maker Caterpillar have notched significant gains so far in March.

     The yen has also stood still after hitting the 110 range to the dollar at one point Thursday, its strongest level in about 16 months. The yen tends to strengthen toward the end of March as foreign operations send money back to their Japanese headquarters, but such moves seemed to have run their course. This further helped stock prices here on Tuesday.

     But the recent rise in resource-related issues "is nothing more than investors buying back such shares," said Masakuni Fujiwara of VistaMax Fund Advisors. Hopes for a comeback in China and other emerging economies must grow for share prices to continue pushing upward.

(Nikkei)

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