Japan's Nikkei pares gains as BOJ data lifts rate hike bets
TOKYO, July 1 (Reuters) -Japan's Nikkei share average traded higher on Monday but erased most of early gains, after the Bank of Japan's Tankan survey drove expectations for the central bank's interest rate hike bets.
The Nikkei .N225 was up 0.26% at 39,687.32 by the midday break, after rising as much as 0.9% earlier in the session, tracking its futures higher on Friday.
The Nikkei average futures on the Chicago Mercantile Exchange NIYcm1 ended 1% higher on Friday.
The broader Topix .TOPX rose 0.49% to 2,823.34.
"The outcome of the BOJ's tankan suggested that Japanese companies will keep raising prices and inflation will continue," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.
"That lifted expectations that the BOJ will raise rates again soon, and promoted inventors to sell stocks to lock in profits."
The BOJ's closely watched "tankan" survey showed on Monday the headline sentiment index for big manufacturers hit +13 in June, up from +11 in March and slightly exceeding a median market forecast for a reading of +12.
The reading, which was the highest since March 2022, reflected a rebound in automobile sector output and success by manufacturers to pass on rising raw material costs through price hikes.
Japan's 10-year government bond yield JP10YTN=JBTC rose 3 basis points to 1.075%.
Shares of department store operators rose, with J.Front Retailing 3086.T surging 12.76% to become the top percentage gainer on the Nikkei and Takashimaya 8233.T jumping 7.9%, after they raised their annual profit forecast.
The shipping sector .ISHIP.T rose 3.52% and was the top gainer among the Tokyo Stock Exchange's 33 industry sub-indexes.
The insurance sector .IINSU.T rose 2.13%.
Medical equipment maker Terumo 4543.T fell 2.68% to become the biggest drag for the Nikkei.
Microchip equipment maker Lasertec 6920.T fell 3.63% to become the biggest loser on the Nikkei.
Reporting by Junko Fujita; Editing by Rashmi Aich
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