Nikkei rises on futures-related buying

* Foreign investors chase futures market higher – analysts * Brother tumbles on M&A news By Ayai Tomisawa TOKYO, March 12 (Reuters) – Japan’s Nikkei share average rose on Thursday as investors chased the market higher before the futures settlement.

The Nikkei rose 0.8 percent to 18,865.36 points by midmorning, moving closer to its 15-year high of 18,979.64 hit last Friday.

Index-heavy stocks led the gains, with Fanuc Corp rising 2.6 percent and SoftBank Corp gaining 1.5 percent. The two companies together contributed a hefty 36 points to the Nikkei.

Traders were also positioning for Friday’s settlement for Nikkei futures and options contracts expiring in March, analysts said.

The closely watched settlement price, known in Japan as the special quotation, or “SQ”, is calculated from the opening prices of the 225 shares in the Nikkei average on the second Friday of the month.

“Foreign derivatives investors are seen chasing the market higher,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Those who have long positions in the Nikkei futures are playing the ‘SQ game’. They hope the futures to settle at a higher price.” Analysts also said receding geopolitical concerns also lifted investors’ risk appetite.

Overnight, European shares rebounded, while the International Monetary Fund has agreed to pump $ 10 billion into Ukraine’s troubled economy over the next year.

“Such geopolitical risks as Ukraine issues were hanging over investors’ heads for a long time, so there is a sense of relief in the market,” said Shigemitsu Tsuruta, chief strategist at SMBC Friend Securities.

Thirty-one of the Topix’s 33 subsectors were in positive territory.

Banking shares were higher, with Mitsubishi UFJ Financial Group rising 2.4 percent and Sumitomo Mitsui Financial Group gaining 0.8 percent.

Exporters were in demand as well. Toyota Motor Corp and Honda Motor Co both gained 0.8 percent.

Bucking the trend, Brother Industries Ltd fell more than 5 percent after it said it will buy British barcode-printer maker Domino Printing Sciences Plc for about 1.03 billion pounds in cash ($ 1.55 billion).

The broader Topix added 1.0 percent to 1,541.37 and the JPX-Nikkei Index 400 advanced 1.0 percent to 14,011.00.

(Editing by Kim Coghill)

Nikkei Futures

nikkeifutures.org@imediaone.com

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