Tokyo stocks surge after Yellen speech weakens yen

Tokyo stocks snapped a two-day losing streak Monday, rallying after Federal Reserve chief Janet Yellen hinted that US interest rates could rise before the end of the year, sending the yen lower and boosting exporters.

Sony, Toyota and Nissan were among the gainers as traders cheered her view that the US economy is likely strong enough to absorb a hike, possibly before year's end.

On Friday, Yellen told the Jackson Hole symposium of global central bankers that the case for a rate increase had "strengthened" in recent months, although she did not give a clear timeline.

At the close in Tokyo, the benchmark Nikkei 225 index had soared 2.30 percent, or 376.78 points, to 16,737.49, while the broader Topix index of all first-section shares rose 1.97 percent, or 25.34 points, to finish at 1,313.24.

"There's no reason to wait another few months for a US rate hike," Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Center, told Bloomberg News.

"The US put off a rate increase in the wake of Brexit, and the view seems to be that the state of the country's economy has further improved."

Exporters were the big winners as the dollar rose to 102.32 yen from 101.77 yen in New York and 100.48 yen in Tokyo earlier Friday. A weaker yen is a plus for Japan's exporters as it boosts their overseas profitability.

The yen also came under pressure after Bank of Japan Governor Haruhiko Kuroda left the door open for further easing measures. He told the Jackson Hole symposium that the central bank had "ample space" for additional policy moves.

The BoJ, which holds its next meeting in September, has been under increasing pressure to introduce fresh measures to counter a downturn in the world's number three economy.

Tokyo investors will now be keeping an eye on US and Japanese jobs data this week, as well as other figures from Tokyo including household spending and factory output.

Toyota shares surged 3.99 percent to 6,147 yen, Honda gained 3.70 percent to 3,136 yen and Nissan tacked on 2.77 percent to 1,001 yen.

Sony rose 0.48 percent to 3,347 yen, factory robot maker Fanuc soared 3.05 percent to 17,215 yen and Panasonic climbed 1.32 percent to 1,030 yen.

Energy giant Inpex jumped 1.83 percent to 872.6 yen and refiner JX Holdings was up 0.56 percent at 374.8 yen.

dhl/pb/eb