Nikkei closes at one-month high

Japan's Nikkei share average topped 8,700 for the first time in a month today after Greece's pro-bailout parties won a parliamentary majority at weekend elections, easing fears of a messy euro zone exit.

Investors unwound cautious bets and covered their shorts on economically sensitive sectors such as financials and mining firms while defensive utilities fell, but trading remained light as concerns about the euro zone debt crisis persisted.

The Nikkei rose 1.8 per cent to 8,721.02, its highest closing level since May 22nd and breaching above its 25-day moving average at 8,601.

But it is still down 13.5 per cent so far this quarter after rallying more than 19 per cent in January-March when it logged its best first-quarter performance in 24 years.

Financials were in demand as Greece's immediate fate became clearer. Nomura Holdings, Japan's top investment bank, rose 2.6 per cent and Daiwa Securities Group added 2.7 per cent, while Mitsubishi UFJ Financial Group gained 2 per cent and Mizuho Financial Group gained 3.3 per cent.

Sharp jumped 5.6 per cent after Deutsche Bank upgraded its rating to "hold" from "sell", saying the stock no longer looked expensive, while the shift of its display unit to an unconsolidated affiliate should curb losses.

The battered electronics sector also enjoyed a bounce, with Sony and Panasonic up 4.2 and 3.5 per cent respectively.

The Nikkei volatility index shed 17.5 per cent to a one-month low. The lower the volatility index, the higher the risk appetite.

Domestically driven stocks that found favour in last week's risk-averse climate underperformed the broader market, with Fast Retailing Co Ltd up 0.7 per cent and Softbank down 0.3 per cent. The defensive utility sector also fell into the red, down 0.5 per cent.

The broader Topix rose 1.7 per cent to 738.81, also hitting a one-month closing high. Trading on the main board were thin with 1.48 billion shares changing hands, or 74 per cent of its daily average for the past 90 days.

Reuters