RTTNews - Shrugging off the biggest postwar decline of the economy, investors picked up stocks in early trading in the Japanese market on Wednesday. The sharp contraction did not have a major impact on the mood as the fall was at a slower pace than expected.

Riding on the strength of resources stocks, which rallied sharply on higher oil prices, the Nikkei 225 average moved on to 9,399 after opening with a positive gap at 9,373.

However, with a few front line stocks facing stiff resistance at higher levels, the Nikkei has now drifted down to 9,321 and is up by just 31.97 points over its previous close. The benchmark index has moved up by 2.7% in the previous session.

The Japanese economy shrank by 4% in the January-March period, making the fourth straight quarter-on-quarter contraction. The sharp drop in GDP translates into an annualized shrinkage of 15.2%, the largest decline in the postwar period. But then, analysts were expecting a contraction of 16.2 percent.

Automobile stocks are in demand. Toyota Motor, Nissan Motor, Hino Motors, Suzuki Motor Corp, Honda Motor and Mazda Motor are trading sharply higher. Construction, foods, pharmaceuticals and chemicals are trading mostly firm this morning.

Shares of iron and steel manufacturers, trading houses and sea transport companies are trading higher on high oil prices. Steel stocks JFE Holdings, Nippon Steel, Pacific Metals, Sumitomo Metal Industries and Kobe Steel are trading firm. Among non-ferrous metals, SUMCO Corp., Sumitomo Metal Mining, Sumitomo Electric Industries, Toyo Seikan Kaisha, Toho Zinc, DOWA Holdings, Mitsui Mining and Smelting and Mitsubishi Materials are trading with sharp gains.

Among bank stocks, Sumitomo Mitsui Financial, Shizuoka Bank, Fukuoka Financial Group, Resona Holdings and Chiba Bank are trading sharply, higher while Chuo Mitsui Trust Holdings, Mizuho Financial Group, Mizuho Trust & Banking, Sumitomo Trust, Mitsubishi UFJ Financial and Shinsei Bank are trading flat.

Among other markets in the Asia-Pacific region, Australia, Singapore and Taiwan are trading weak. Korea is trading mixed amid a highly cautious mood while New Zealand is trading modestly higher.

Most of the markets in the Asia-Pacific region had finished sharply higher on Tuesday. Major European markets turned in largely modest gains. The French CAC 40 Index closed up 0.9%, while the German DAX Index also rose, finishing up by 2.2%. Meanwhile, the U.K.'s FTSE 100 Index also saw some strength on the day, closing up by 0.8%.

On Wall Street, traders cut down long positions and took profits on Tuesday as data released by the U.S. Commerce Department showed a decline in housing starts in April to an annual rate of 458,000 units, compared to March's revised rate of 525,000 units, suggesting a strong reacceleration is still some way off. New restrictions placed on the credit card industry sent financial stocks tumbling down sharply.

After a choppy ride, the Dow ended lower by 29.23 points at 8,475 and the S&P 500 closed down 1.58 points at 908. The Nasdaq, however, fared slightly better and closed 2.18 points up at 1,735.

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