Japan shares rise as easing Middle East tension shifts focus to trade deal

By Stanley White
TOKYO, Jan 10 (Reuters) - Japanese shares rose on Friday as
demand for riskier assets increased, buoyed by de-escalation of
diplomatic tension in the Middle East and hopes that the
so-called Phase 1 U.S.-China trade agreement will boost
corporate earnings.
The benchmark Nikkei index .N225 ended up 0.47% at
23,850.57 points. The index rose 0.82% in a week of volatility
when a Wednesday Iranian missile strike on U.S.-led forces in
Iraq rippled through global financial markets.
The attack, which followed the U.S. killing of a prominent
Iranian general last week, sparked fears of wider conflict.
However, global equity markets quickly stabilised after both
the United States and Iran signalled the desire to avoid war.
Market focus consequently returned to the signing of a trade
deal between the United States and China to defuse a months-long
trade war, which would reduce risk in the global economic
outlook.
"Geopolitical risks simply do not tend to have a long-term
impact on financial markets," said Shusuke Yamada, head of
foreign exchange and Japan equity strategy at Merrill Lynch
Japan Securities.
"There were some risks to the outlook last year, like trade
friction, but these factors are not in play this year. There is
no reason to sell risky assets, which is good for equities. I
expect the Nikkei to rise to 25,000 by the end of March."
U.S. President Donald Trump, who last month said the Phase 1
deal would be signed on Jan. 15, on Thursday said the agreement
could be signed "shortly thereafter". The deal is likely to reduce U.S. tariffs on Chinese goods
and boost Chinese purchases of U.S. agricultural products -
measures whose effects are widely expected to propagate
throughout the corporate world, pushing up earnings.
There were 120 advancers on the Nikkei index on Friday
against 91 decliners, while the remaining 14 members of the
index were unchanged.
The largest percentage gainers were industrial machinery
maker IHI Corp 7013.T at 5.14%, followed by semiconductor
manufacturing equipment maker Screen Holdings Co Ltd 7735.T
gaining 4.05%, and convenience store operator Seven & i Holdings
Co Ltd 3382.T at 3.7%.
The largest percentage losses were apparel retailer Fast
Retailing Co Ltd 9983.T at 2.78%, followed by Chubu Electric
Power Co Inc 9502.T losing 2.35%, and automaker Isuzu Motors
Ltd 7202.T at 1.92%.
Fast Retailing cut its full-year profit outlook due to
worse-than-expected quarterly earnings results on Thursday, hit
by Hong Kong protests and a South Korean consumer boycott of
Japanese goods that dented sales at its Uniqlo stores.
The broader Topix index .TOPX rose 0.35% to 1,735.16 on
Friday. For the week, the Topix was up 0.80%.
The volume of shares traded on the Tokyo Stock Exchange's
main board .TOPX was 1.09 billion, compared to the average of
1.12 billion over the past 30 days.

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Trump says China trade deal may be signed shortly after Jan. 15
Fast Retailing cuts outlook after Asia strife hits
Uniqlo sales ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>