Nikkei logs biggest weekly gain in two years

The Nikkei average extended gains to log its biggest weekly advance in two years yesterday, though the mood was far from upbeat given uncertainty over whether Europe will next week manage to cobble together steps to counter the debt crisis there. After rallying on a move by the world's central banks to ease funding strains among banks, the Nikkei now faces major resistance, including from its 75-day moving average, a sustainable break of which is seen as depending on Europe. "If European leaders can agree on a more active role for the European Central Bank and possibly aid from the IMF, that would be positive. But that looks difficult, so there's risk that we are in for a major disappointment (this) week," said Norihiro Fujito, senior strategist at Mitsubishi UFJ Morgan Stanley Securities. The benchmark Nikkei added 0.5 per cent to 8,643.75, for a weekly gain of 5.9 per cent, its biggest since the first week of December 2009. In one positive technical sign, the Nikkei stayed comfortably above its 25-day moving average, at 8,573. Hurdles Still there are many more hurdles for the Nikkei, such as its 75-day moving average at 8,682 and the Ichimoku cloud that looms above 8,700. "Right now we are in the middle of the market's trading range from September and October, which means there will be a lot of selling interest here," said Hiroyuki Fukunaga, CEO of Investrust. The broader Topix climbed 0.6 per cent to 744.14. Trade volume slowed to 1.57 billion shares, in line with the monthly average, from Thursday's 2 billion. Advancers outnumbered decliners by 960 to 555. Many doubt that the Nikkei can break through its October 31 high above 9,100 in the near future, given the lack of buying from foreign investors.