Tokyo stocks close higher but gains capped ahead of Fed meeting

TOKYO, July 27 (Xinhua) -- Tokyo stocks closed higher Wednesday as technology shares advanced, but gains were capped by caution ahead of a likely rate hike by the U.S. Federal Reserve to be announced later in the day.

The 225-issue Nikkei Stock Average added 60.54 points, or 0.22 percent, from Tuesday to close the day at 27,715.75.

The broader Topix index, meanwhile, edged up 2.58 points, or 0.13 percent, to finish at 1,945.75.

Traders here said that the market was pressured from the get-go following Wall Street's overnight slump, with investors rattled by poor consumer confidence data adding to ongoing concerns about the future health of the U.S. economy.

They added that investors refrained from making bold moves ahead of the Fed's likely announcement of a 0.75 percentage point interest rate hike to fight inflation at the conclusion of its two-day policy-setting meeting later Wednesday.

"There won't be a major surprise from the Federal Open Market Committee (FOMC) but investors just want to confirm the outcome before making bets," Takatoshi Itoshima, strategist at Pictet Asset Management Japan, was quoted as saying.

"After this major event, investors will look into details in each corporate outlook and selectively buying stocks," added Itoshima.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., meanwhile, said that investors were looking ahead to further rate hikes from the Fed amid concerns over inflation as well as the U.S. labor market.

"Both in the equities and currency markets, market players awaited hints for the pace of rate hikes from September, along with the Fed's views on U.S. inflation and labor market situation," Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said.

By the close of play, land transportation, marine transportation, and pharmaceutical issues comprised those that gained the most, and issues that fell outpaced those that rose by 1,078 to 683 on the Prime Market, while 77 ended the day unchanged.

Heavily-weighted chip-oriented shares found favor, however, with Tokyo Electron climbing 3.1 percent, while Advantest gained 2.3 percent.

Screen Holdings, meanwhile, ended the day 2.5 percent higher.

But Nikkei heavyweight Fast Retailing, operator of the Uniqlo clothing chain weighed on the market, dropping 1.4 percent by the close.

Camera maker Canon was another drag, dropping 1.0 percent, after reporting a worse-than-expected net profit outlook for the year through December.

On the Prime Market on Wednesday, 925.21 million shares changed hands, rising from Tuesday's volume of 869.89 million shares.

The turnover on the third trading day of the week came to 2,372.88 billion yen (17.33 billion U.S. dollars).