ASIA MARKETS: Japan Stocks Rebound After Sell-off, Leading Asia

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Japanese stocks jumped in early trading Friday to recover some of the steep losses suffered in the previous session, with exporters aided as the U.S. dollar climbed above Yen101 after a slew of monthly economic data.

The Nikkei Stock Average gained 2.2% to 13,888.10 a day after it plunged by 5.2%, while the broader Topix rose 1.4%. The gains were steady after the sharp volatility seen recently amid concerns over an increase in Japanese government bond yields.

The rebound kept the Nikkei Average on course for modest gains in May -- the 10th straight month of advances -- despite steep losses suffered over the past few days.

Elsewhere in Asia, Australia's S&P/ASX 200 gained 0.5%, and South Korea's Kospi rose 0.4%.

The broad advances came as stocks on Wall Street rose overnight on signs of further improvement in the U.S. housing market, while weaker-than-expected data on first-quarter economic growth and jobless claims raised hopes the Federal Reserve may keep its current level of bond purchases.

"Every U.S. data point about the pace of economic growth is being closely examined by market followers after Federal Reserve Chairman Ben Bernanke indicated that the central bank could pare back its stimulus efforts should the U.S. economy continue to improve," said Perpetual head of investment-market research Matthew Sherwood.

"The Fed needs to improve its communication with the market about what its intentions truly are, but the stimulus is only likely to be reduced, not reversed," he said.

In Japan, the rebound followed data showing April core consumer prices rose 0.3% from March, although they were 0.4% lower from the year-ago month. Industrial production during the same month rose 1.7% from a year earlier, but a survey indicated lingering pessimism, with manufacturers tipping flat output for May and a 1.4% drop in June.

Among the notable gainers in Tokyo, Sony Corp. (SNE) jumped 3.4% after several reports said the company has tapped Morgan Stanley and Citigroup to help sound out options for its entertainment business. The reports came after billionaire hedge-fund manager Daniel Loeb called on the electronics major to spin off its entertainment business.

Several other exporters also advanced as the U.S. dollar (USDJPY) traded at Yen101.17 after sliding toward the Yen100 level Thursday.

Shares of Fanuc Corp. (FANUY) jumped 4.2%, and Kyocera Corp. (KYO) added 2.7%.

Fast Retailing Co. (FRCOY) gained 3.3% after plunging 11% in the previous session.

Financial stocks also rebounded after recent losses, with Sumitomo Mitsui Financial Group Inc. (SMFJY) rising 1.5%, and Mitsubishi UFJ Financial Group Inc. (MTU) adding 0.7%.

In Sydney trade, an overnight improvement in gold prices sent producers of the metal rallying, with Evolution Mining Ltd. (CAHPF) leaping 5.1% and Newcrest Mining Ltd. (NCMGY) ahead by 1%.

Other mining majors also advanced, with BHP Billiton Ltd. (BHP) rising 1.5%, Rio Tinto Ltd. (RIO) up 2.9%, and uranium extractor Paladin Energy Ltd. (PDN.T) adding 3.6%.

The modest overnight U.S. gains also appeared to help the large banks, as Commonwealth Bank of Australia (CBAUY) rose 0.7%, and Macquarie Group Ltd. (MCQEF) added 1.8%.

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