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Japanese Shares Extend Rally as Omicron Fears Fade

Japanese shares jumped on Wednesday, as investors grew hopeful that the Omicron coronavirus variant would be less disruptive for the global economy than initially feared.

The Nikkei share average jumped 1.4% to end at 28,860.62, its highest close since Nov. 25, though it met a resistance around 28,910, where it has its 50-day and 200-day moving averages.

The broader Topix added 0.6% to 2,002.24, while brighter sentiment saw the index of Mothers start-up market, battered in recent weeks along with their U.S. peers, jumping 2.18%.

Preliminary evidence indicates that Omicron likely has a higher degree of transmissibility but is less severe, top U.S. infectious disease expert Anthony Fauci said on Tuesday.

Tech shares led the gains with semiconductor-related stocks jumping 2.6%.

Renesas Electronics soared 6.1%. Taiyo Yuden rallied 5.1% while Tokyo Electron added 2.8% and Lasertec went up 2.3%.

Electronics maker Omron gained 3.6% while game maker Nintendo added 3.5%.

U.S. stocks gained on Tuesday despite a rise in short-term bond yields, signalling that stock markets potentially digested the initial shock from worries that the Federal Reserve may accelerate tapering in its bond buying.

But some market players remained cautious.

"Looking ahead to next year, the Fed's tapering and rate hikes will remain a big theme and I don't think the market is completely done with corrections related to that," said Yuya Fukue, trader at Rheos Capital Works.

Interest rate-sensitive real estate companies fell, hit by a portfolio rebalancing related to an index adjustment, as well as a media report on the government's plan to reduce tax deduction for housing loans.

Mitsui Fudosan fell 3.7% while Sumitomo Realty and Development lost 3.2% and Mitsubishi Estate shed 2.2% to hit a one-year low.

The Topix real estate index fell 2.1% to become the worst performer among Topix 33 industry subindexes.

Reporting by Hideyuki Sano; Editing by Devika Syamnath and Rashmi Aich

Source: Reuters

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