RTTNews - The Japanese stock market is trading higher on Thursday after U.S. stocks closed mostly higher overnight following the Federal Reserve's announcement that it would keep interest rates unchanged. Investors were encouraged by the U.S. central bank's acknowledgment that it noted some improvement in the economy.

In mid-morning trades, the benchmark Nikkei 225 Index is gaining 114.22 points or 1.19% to 9,704.54 and the broader Topix Index of all First Section Issues is adding 6.86 points or 0.76% to 909.32.

U.S. stocks closed mostly higher on Wednesday, although the major averages turned in a mixed performance, after the Federal Reserve announced it would keep interest rates unchanged. While the central bank noted some improvement in the economy and removed its warning about the possibility of deflation, many economists believe the historically low rates could remain for some time, leaving worries that the massive stimulus efforts could lead to inflation down the road.

Crude oil closed a choppy session modestly lower on Wednesday after the Federal Reserve left interest rates unchanged. Investors also mulled over the Energy Department's weekly inventory report, which showed a drop in crude stocks but a rise in gasoline supplies. Light sweet crude for August delivery dropped to US$68.67 per barrel on the New York Mercantile Exchange, down US$0.57 on the session.

The Japanese market ended in positive territory on Wednesday, led by a rise in commodity prices. Trading was relatively less as investors preferred to adopt a wait-and-watch approach ahead of the FOMC meeting in the U.S. later in the day . The Nikkei 225 Average rose 40.71 points or 0.43 percent to close at 9,590.32 and the Topix index closed up 0.77 points or 0.1 percent at 902.46.

In the currency market, the U.S. dollar was trading in the lower 96 yen-range on Thursday. In mid-morning trades, the dollar was quoted in a range of 96.21-96.24 yen, up 0.87 yen from Wednesday's close of 95.34-95.36 yen in Tokyo.

In the banking sector, shares of Shinsei Bank and Aozora banks are up more than 7% each after Japan's public broadcaster NHK reported that the banks have reached a basic agreement to merge by the end of 2010. Mitsubishi UFJ, Resona Holdings and Sumitomo Mitsui Financial are trading higher in a range of 0.25%-0.85%. Brokerage Nomura Holdings is up more than 1%.

Tech stocks are trading higher after Oracle Corp.'s fourth-quarter earnings declined from the year-ago period, but beat expectations. Advantest is up more than 1%, Tokyo Electron is surging 4% and Kyocera is adding 1%. Advantest will keep cash on hand at about the current level of 130 billion yen to prepare for potential acquisitions or entry into new business areas, according to the Nikkei business daily.

Among export-oriented stocks, Canon is up almost 1% and Komatsu as well as Sharp are up more than 2% each. Mitsubishi Electric plans to build plants in the U.S. and in Europe to assemble solar power generation systems using solar panels shipped from Japan, the Nikkei business daily said. Shares of the company are up more than 6%.

Nikon is up almost 4% after Belgian equipment maker Metris said Wednesday that Nikon launched its Euro 5.50 per share buyout bid for the company. Nippon Steel Corp is up more than 1% despite ratings agency Standard & Poor's cutting the outlook for the company's long-term corporate credit rating to negative from stable due to a significant decline in steel demand.

Among auto stocks, Honda, Nissan and Toyota are trading higher in a range of 1%-2%, while Mazda is gaining more than 2%. In the oil sector, Inpex is up almost 1%, while Nippon Oil and Showa Shell are trading lower. Among trading houses, Mitsubishi Corp., Mitsui & Co. and Itochu are gaining in a range of 2%-4%.

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