(RTTNews) - The Japanese stock market was trading sharply higher on Wednesday following the overnight surge on Wall Street and on hopes that the Bank of Japan will cut interest rates at its upcoming policy meeting later this week. Additionally, a weaker yen boosted export-oriented stocks.

At 8.51 P.M. ET, the benchmark Nikkei 225 Index was gaining 497.85 points or 6.53% to 8,119.77 and the broader Topix Index of all First Section Issues was advancing 51.98 points to 836.01.

According to news reports in Japan, the Bank of Japan will consider a reduction in interest rates this week. The BoJ board meets Friday, and is expected to monitor market conditions in the interim before deciding on a rate move. Japan’s current benchmark interest rate is among the lowest in the industrialized world at 0.50%. News reports indicate the BoJ is considering a reduction of 25 basis points.

U.S. stocks staged their second-biggest single session point gain on Tuesday on a round of profit taking and anticipation that the Federal Reserve was about to lower interest rates on Wednesday. Most economists expect the Fed to reduce the interest rate by 50 basis points from the current rate of 1.5%.

Oil closed a volatile session slightly lower on Tuesday after earlier reaching a 17-month low. Light sweet crude for December delivery ended at $62.73 on the New York Mercantile Exchange, down $0.49 on the session.

The Japanese stock market rebounded sharply on Tuesday to end a four-day losing streak. A round of bargain hunting sent the benchmark Nikkei 225 index up 459.02 points, or 6.4% to close at 7,621.92. The broader Topix index gained 37.57 points, or 5.0% to settle at 784.03.

On the economic front, the Ministry of Economy, Trade and Industry said in a preliminary report on Wednesday that Japan’s industrial output climbed 1.2% on month in September. That was higher than the 0.4% monthly increase that analysts had been expecting, and it was also sharply higher than the 3.5% monthly decline in August. On an annual basis, industrial output was up 0.4% in September. For the third quarter of 2008, production fell 1.2% compared to the previous quarter, down for the third straight quarter.

In the currency market, the U.S. dollar was trading in the upper 97 yen-level on Wednesday following the sharp gains by U.S. stocks overnight and on reports that the Bank of Japan may cut interest rates. In early trades, the dollar was quoted in a range of 97.72-97.76 yen, up 3.18 yen from Tuesday’s close of 94.54-94.56 yen in Tokyo.

In the banking sector, Mitsubishi UFJ advanced 7.21%, Mizuho Financial jumped 6.19%, Sumitomo Mitsui climbed 7.76% and Resona Holdings rose 7.73%.

Automakers and exporters also traded sharply higher on the back of a weaker yen. Toyota soared 11.99%, Honda rose 14.04%, Nissan gained 10.88% and Mazda jumped 14.20%. Among export-oriented stocks, Sony rose 4.50%, Nikon gained 6.41% and heavy machinery maker Komatsu climbed 7.87%.

In the tech space, Advantest soared 9.45%, Kyocera gained 6.49%, Fujitsu climbed 7.98% and Fanuc rose 5.50%.

In the oil sector, Inpex Holdings gained 5.12%, Nippon Oil climbed 9.87% and Showa Shell rose 6.59%. Trading house Marubeni soared 9.04% and Sojitz gained 10.88%.

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Posted in Categories: Japan, Releases, Stocks, USA.

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