Tokyo shares rebound as China cuts lending rate

TOKYO — Tokyo stocks closed higher on Thursday, bouncing back from sharp losses in the previous session as China's central bank cut key lending rates, brightening market sentiment.

The benchmark Nikkei 225 index added 1.11 percent, or 305.70 points, to 27,772.93, while the broader Topix index gained 0.98 percent, or 18.81 points, to 1,938.53.

The dollar fetched 114.48 yen in Asian trade, against 114.33 yen in New York late Wednesday. 

Gains in Tokyo shares were "a reaction to yesterday's losses", Makoto Sengoku, senior equity market analyst at Tokai Tokyo Securities, said

Aside from the rebound, there were some positive factors at play, he said: "China cut key rates, and investors are reacting positively to that."

On Wednesday, the Nikkei fell more than three per cent as market heavyweight Sony plummeted on news of Microsoft's plans to buy US gaming giant Activision Blizzard.

The ongoing semiconductor shortage, worries over US inflation and rising virus cases in Japan also weighed on the market during Wednesday's session.

"I think yesterday's fall was excessive. But the market did face many negative factors," Sengoku said.

On Thursday, Sony Group shares rebounded 5.84 per cent to 13,135 yen after plunging nearly 13 per cent in the previous session. 

Toyota, which had previously fallen on news that it no longer expects to meet its annual production target, rose 1.71 per cent to 2,342.5 yen, while Panasonic edged up 0.03 per cent to 1,293.5 yen.