Japan’s Nikkei average rebounded 2
percent on Tuesday, regaining some ground lost in the previous session
as fears receded that a controversial bailout proposal for Cyprus could
reignite the euro zone crisis.
Analysts said that the disruption to the
Japanese market from the unusual bailout plan for Cyprus seems to have
run its course, although the Japanese equities market is prone
to volatility because it is vulnerable to a rise in the yen when global
market uncertainty increases.
“It looks like the bailout issue will be
contained in Cyprus itself and it probably won’t spread to the euro
zone. As the Japanese market was rallying lately, Monday’s selling
served as a good opportunity for correction,” said Yutaka Miura, a
senior technical analyst at Mizuho Securities. “But European debt issues
will likely take years to be resolved, and we need to be prepared for a
sell-off like this again as the Japanese market could easily get hit by
a strong yen when investors buy the yen.”
The Nikkei added 247.60 points to
12,468.23 after sliding 2.7 percent on Monday, its biggest one-day drop
in 10 months. The index is just 0.74 percent away from a 4-1/2 year high
of 12,560.95 marked last Friday.
Ahead of a parliamentary vote in Cyprus
that will either secure the island’s financial rescue or threaten
default, euro zone ministers have urged Cyprus to let smaller savers
escape a controversial levy on bank deposits.
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