Japanese shares end higher on Wall Street gains, financials weigh

TOKYO : Japanese shares ended higher on Monday, underpinned by Wall Street's strength in the previous session, with heavyweight technology and energy stocks leading the gains, while a drop in banks and insurers weighed on the market.

The Nikkei share average rose 0.65 per cent to close at 26,405.87, while the broader Topix edged up 0.24 per cent at 1,902.52.

"Japanese shares rose because U.S. equities gained at the end of last week, but the trading is very quiet with most participants in the U.S. and Europe away for holidays," said Shuji Hosoi, senior strategist at Daiwa Securities.

Heavyweight Fast Retailing, owner of the Uniqlo brand, rose 2.0 per cent and chip-making equipment maker Tokyo Electron gained 2.22 per cent. Air-conditioning maker Daikin Industries climbed 1.39 per cent.

The rise in oil prices pushed the oil explorers index up 2.5 per cent, making it the top gainer among the 33 industry sub-indexes on the Tokyo Stock Exchange. Inpex jumped 2.53 per cent.

The crude refiners' index gained 1.33 per cent, with Idemitsu Kosan rising 2.81 per cent.

The banking sector lost 1.35 per cent after surging more than 10 per cent so far this month on expectations for better profits after the central bank last week allowed the 10-year government bond yield to rise up to 0.5 per cent last week, from 0.25 per cent. The 10-year JGB yield was last at 0.445 per cent.

Sumitomo Mitsui Financial Group lost 2.21 per cent, while Resona Holdings fell 2.75 per cent.

The insurance sector fell 1.37 per cent.

"The 10-year government bond yield hovers below the top end of the Bank of Japan's (BOJ) policy band, which prompted a sell-off of banking shares," Hosoi said.

There were 158 advancers on the Nikkei index against 60 decliners.

The volume of shares traded on the Tokyo bourse's main board was 0.85 billion, compared to the average of 1.25 billion in the past 30 days.