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Japan's Nikkei breaks 10,000 for first time in seven months

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TOKYO — Japan’s Nikkei Stock Average rose briefly above the symbolically significant 10,000 mark on Friday, its highest point in seven months, amid signs of optimism for recovery in the world’s third-largest economy.

The Japanese stock rally came as Greece moved toward a deal to restructure its massive debt, easing concerns of a default. The Nikkei broke the 10,000 barrier for the first time since Aug. 1 just before the close of trading, but fell briefly after that to close at 9,929.74, up 1.65 percent on the day.

As Japan prepares for a weekend of somber services and memorials to mark the one-year anniversary of its mega-earthquake and tsunami, the Nikkei is now back to pre-disaster levels, and the country has had weeks of encouraging economic news.

The yen has weakened by more than 6 percent since Feb. 1, alleviating the strain on majors exporters who said that the strong yen was destroying their profits, making their products more expensive overseas. Meanwhile, driven by construction demand in the disaster-hit northeast, industrial production is back to pre-disaster levels. Most economists forecast modest GDP growth in the first quarter of the next fiscal year, which begins in April.

“Even before the overseas economy started to firm and the [yen] started to depreciate, we had been expecting real GDP growth to return to positive territory” in the first quarter of 2012, said a recent economic research report from Barclays Capital. “In this sense, the favorable currency movements are an important bonus, but not the sole driver.”

The yen on Friday stood at 81.7 against the dollar; it was as high as 76.2 against the dollar at the beginning of February. Toyota chief Akio Toyoda has said that the ideal exchange rate is 90 yen to the dollar.

But even as stocks rise and the yen helps this country’s major exporters — auto and electronics manufacturers, most notably — the economy is still vulnerable. With 52 of its 54 reactors shut down in the wake of a triple meltdown at the Fukushima Daiichi nuclear power plant, Japan has been forced to import costly coal and liquefied natural gas.

That dependence leaves the country susceptible to major worldwide economic shocks; it also means that Japan is in danger of becoming a perpetual trade deficit country, something unthinkable during its rise as a global power.

Japan in 2011 logged its first trade deficit in three decades.

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