Tokyo stocks up on U.S. comeback

Korean workers plan a second day of industrial action Wednesday

TOKYO, Japan -- Tokyo stocks gathered strength Wednesday morning, underpinned by short-covering after a dramatic comeback in U.S. stocks late in the day.

This provided relief to a market that had been dented by weak Japanese economic data earlier in the week.

The benchmark Nikkei 225 index was up 0.83 percent or 106.77 points at 12,946.87, while the broader TOPIX index edged up 5.69 points or 0.45 percent to 1,278.90.

Elsewhere in the region, Korea's market was relatively flat, with the Kospi about 1.7 points stronger at 608.84. Korea entered the second day of large-scale industrial action Wednesday, with hospital staff joining strike action.

In Australia, the benchmark S&P/ASX200 was 2.9 points lower at 3398.9. Australia's biggest telco, Telstra, which lost 9.4 percent Tuesday after a shock profit warning, tumbled a further 20c, or 3.3 percent, in early trade to A$5.88. At one point it was as low as $5.71.

Few strong reasons to buy

In Japan, several banks and big-name technology firms, whose steep falls sent the benchmark Nikkei down nearly three percent the previous day, were showing little upward momentum.

"There are few strong reasons for investors to buy aggressively at current levels," said Kunihiro Hatae, general manager Tokai Tokyo Securities.

Structural reforms planned by Prime Minister Junichiro Koizumi are expected to put deflationary pressure on the fragile economy and there is little likelihood that companies' earnings per share will improve in the near-term, he said.

Japan's gross domestic product data on Monday came in worse than expected with a contraction of 0.2 percent for the January-March quarter, shaking investor confidence especially on growth stocks such as top mobile operator NTT DoCoMo Inc and number one chip maker Toshiba

DoCoMo, Toshiba make gains

DoCoMo was up 0.49 percent to 2.07 million yen, paring a 5.94 percent loss the previous day. Toshiba edged up 0.94 percent to 643 yen after falling 3.92 percent the previous day.

"The late bounce in New York is a real relief to the market here," said Tsuyoshi Segawa, equity strategist at Shinko Securities.

But caution remained over high-tech issues after a bleak profit forecast from Nokia Corp, the world's biggest mobile phone company.

In the banking sector, Mizuho Holdings Inc, the world's largest banking group by assets, and Mitsubishi Tokyo Financial Group managed to claw back some territory after hitting record lows the previous day.

Mizuho rose 2.44 percent to 546,000 yen and MTFG gained 1.92 percent to 1.06 million yen.

Reuters contributed to this report.