Nikkei hits fresh 15-year high on improved ROE expectations

* Hitachi, Mitsubishi Heavy rise after Nikkei ROE report * Toyota hits record high on appetite for Japanese shares * BOJ seen maintaining policy By Ayai Tomisawa TOKYO, March 17 (Reuters) – Japan’s Nikkei share average rose to a fresh 15-year high on Tuesday morning following gains in U.S. and European shares, while expectations that companies could improve their return on equity will improve lifted overall sentiment.

The Nikkei share average rose 0.8 percent to 19,405.72 in midmorning trade, after hitting as high as 19,428.52, the highest level since April 2000.

Hitachi Ltd gained 3.2 percent and Mitsubishi Heavy Industries rose 2.1 percent after the Nikkei business daily reported that the companies aim to lift return on equity above 10 percent to convince investors that they can earn profits even with limited capital.

“Changes seen in the microeconomic level are attracting buyers,” said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

Meanwhile, Toyota Motor Corp, a bellwether company in the Japanese market, rose 1.1 percent to hit a record high of 8,369 yen.

“The Japanese market is outperforming its global peers, and if you don’t want to fall behind, you can’t be underweight Japan,” Kuramochi said. “Toyota has a big market capitalization, and those who are bullish on Japan are seen buying Toyota.” Tokyo Gas rose as high as 3.1 percent after the Nikkei reported that it will likely repurchase some 50 billion yen of shares in the year ending March 2016, among its largest buybacks ever, as part of efforts to boost return on equity.

Expectations for higher shareholder returns have supported the mood since industrial robot maker Fanuc said last week it is considering dividend hikes and more dialogue with investors.

The Bank of Japan will report the outcome of its monetary policy later in the day. It is set to maintain its massive stimulus programme and signal its conviction that a steady economic recovery will help achieve its ambitious 2 percent price growth target without immediate, additional monetary easing.

The broader Topix rose 0.6 percent to 1,567.21 and the JPX-Nikkei Index 400 advanced 0.7 percent to 14,268.11.

(Editing by Eric Meijer)

Nikkei Futures

nikkeifutures.org@imediaone.com

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