Tokyo - Tokyo stocks ended 0.30 percent higher Tuesday on late bargain-hunting, despite nervousness at a lack of movement in solving a US budget stand-off that could lead to a national default.
The Nikkei 225 stock index, which closed at its lowest level in more than a month on Monday, gained 41.29 points to 13,894.61, while the Topix index of all first-section issues increased 0.22 percent, or 2.55 points, to 1,150.13.
“Considering the recent decline, I can say it's natural to see buying on dips,” said Katsuhiro Kondo, a broker with Tokai Tokyo Securities.
“But today's rebound does not guarantee a firm recovery,” Kondo said. “It's difficult to buy shares until the US budget impasse finishes.”
The stalemate on Capitol Hill, where right-wing Republicans are holding the budget hostage over a healthcare law they do not like, could spill over into a vote on raising the US debt ceiling. This must be done by October 17, or the US will run out of cash to service its debts.
“Even (if) the US debt issue is resolved before the October 17
deadline, the dollar's sharp rebound in the near term is unlikely,” said Daisuke Uno, strategist with Sumitomo Mitsui Banking Corp.
“There's a lack of significant incentives to buy the dollar as President (Barack) Obama's political power appears to be weakening and a further delay in (the) Federal Reserve's tapering of its stimulus could lead to a dollar sell-off,” he said.
The dollar was quoted at 97.06 yen in Tokyo afternoon trade from 96.68 yen in New York Monday afternoon.
A strong yen is negative for Japanese exporters as it makes their products less competitive abroad and erodes repatriated income.
Japan's Finance Minister Taro Aso said Tuesday any country with large holdings of US government bonds would have to consider what would happen if the debt ceiling is not raised in a timely manner.
“We have to look at various possibilities, including a possible decline in the value of Japan's Treasury holdings,” Aso said.
While Aso reiterated that he expects the debt ceiling issue to be resolved before the deadline, many countries - significantly Japan and China - are warily eyeing the Washington fight.
Japan Airlines tumbled 1.89 percent to 5,700 yen on profit-taking following a three percent rise on Monday helped by news of its purchase of 31 Airbus planes.
Fuji Heavy, which makes Subaru cars, rose 2.24 percent to 2,732
yen after the Nikkei business daily reported that the company and Toyota Motor would jointly develop a hybrid sport utility vehicle.
Rakuten dropped 11.66 percent to 1,196 yen after rival Yahoo Japan's announcement that it will stop charging sellers who use its online shopping site. - Sapa-AFP