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. Last Updated: 07/27/2016

Nikkei Reaches One-Year High

TOKYO -- Tokyo's Nikkei average rallied almost 2 percent to close above 10,000 for the first time in a year Monday, led by UFJ Holdings and other big banks, steel makers and shipping firms on recent signs of economic recovery in Japan.

The Nikkei ended up 1.72 percent or 169.50 points at 10,032.97, closing above 10,000 for the first time since August 26 of last year. The TOPIX index rose 1.16 percent to 976.00, though short of its 2003 high of 979.38 hit on July 9.

Upbeat gross domestic product data last week plus data showing rising machinery orders, a key gauge of future capital investment, have helped fuel-heavy buying by foreign investors betting on stronger-than-expected growth in Japan.

"Investors are buying into an economic recovery spurred on by capital investment," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "I don't believe we'll stop at 10,000. The Nikkei could easily reach 12,000 by next March."

JFE Holdings, Japan's second-biggest steel maker, rose 5.23 percent to 2,315 yen after a newspaper report that it would post a 77 percent rise in its group pre-tax profit to 185 billion yen ($1.55 billion) for the year ending next March.

Sector rivals followed suit, bolstered by hopes that they too will benefit from a cyclical upturn in the global economy and strong demand from China and other Asian countries. Nisshin Steel Co. Ltd. jumped 6.25 percent to a 2003 high of 170 yen.

Among banks, UFJ roared 9.89 percent higher to 300,000 yen, while Mizuho Financial Group, the world's largest lending group by assets, threw on 6.36 percent to 117,000 yen.

Investors also funneled money into the shipping sector, with Kawasaki Kisen Kaisha Ltd surging 8.24 percent to 407 yen and smaller rival rival Meiji Shipping Co Ltd jumping 35.56 percent to 305 yen.

The marine transportation sector subindex ISHIP rose 5.56 percent, by far the top performer of the day.

Relief that the biggest-ever power outage in North America had little impact on Wall Street on Friday and the absence in Tokyo of heavy selling by corporate pension funds and banks unwinding cross-held shares also lifted the market, traders said.

"We were looking for more selling by banks and pension funds as workers return after 'Obon,' but selling seems to be light," said Hiroaki Kuramochi, head of global equities at Credit Lyonnais, referring to the summer holiday season when many Japanese return to their home towns.

"And we continue to see strong foreign bids."