The Avanti Group * Exporters and financials gain * Cyprus parliament to vote on bailout later on Tuesday * Underlying trend still bullish- analysts * TPP should be positive for Japanese equities - analyst By Ayai Tomisawa TOKYO, March 19 (Reuters) - Japan's Nikkei average rebounded 2 percent on Tuesday, regaining some ground lost in the previous session as fears receded that a controversial bailout proposal for Cyprus could reignite the euro zone crisis. Analysts said that the disruption to the Japanese market from the unusual bailout plan for Cyprus seems to have run its course, although the Japanese equities market is prone to volatility because it is vulnerable to a rise in the yen when global market uncertainty increases.

1. * Exporters and financials gain
* Cyprus parliament to vote on bailout later on Tuesday
* Underlying trend still bullish- analysts
* TPP should be positive for Japanese equities - analyst
By Ayai Tomisawa
TOKYO, March 19 (Reuters) - Japan's Nikkei average rebounded 2 percent on Tuesday,
regaining some ground lost in the previous session as fears receded that a controversial
bailout proposal for Cyprus could reignite the euro zone crisis. Analysts said that the
disruption to the Japanese market from the unusual bailout plan for Cyprus seems to
have run its course, although the Japanese equities market is prone to volatility because
it is vulnerable to a rise in the yen when global market uncertainty increases.

2. "It looks like the bailout issue will be contained in Cyprus itself and it probably won't
spread to the euro zone. As the Japanese market was rallying lately, Monday's selling
served as a good opportunity for correction," said Yutaka Miura, a senior technical analyst
at Mizuho Securities. "But European debt issues will likely take years to be resolved, and
we need to be prepared for a sell-off like this again as the Japanese market could easily get
hit by a strong yen when investors buy the yen." The Nikkei added 247.60 points to
12,468.23 after sliding 2.7 percent on Monday, its biggest one-day drop in 10 months. The
index is just 0.74 percent away from a 4-1/2 year high of 12,560.95 marked last Friday.
Ahead of a parliamentary vote in Cyprus that will either secure the island's financial rescue
or threaten default, euro zone ministers have urged Cyprus to let smaller savers escape a
controversial levy on bank deposits.
Still, investors are concerned that forcing ordinary citizens to fund bank rescues up front,
through a tax on deposits, is setting a precedent that could lead to other bailout countries
imposing something similar on depositors. On Tuesday, Monday losers such as exporters
and financials were bought back. Sony Corp surged 6.8 percent and was the most-traded
on the main board by turnover. Mazda Motor Corp jumped 5.6 percent and Nikon Corp
rose 3.4 percent.

3. The broader Topix gained 1.7 percent to
1,045.89 in relatively thin trade, with 2.84
billion shares changing hands. Last week,
average daily volume was 3.72 billion
shares. The benchmark Nikkei has rallied
nearly 44 percent since mid-November
when Prime Minister Shinzo Abe embarked
on aggressive fiscal and monetary
expansion campaign to revive the ailing
economy. Investors are also focused on the
U.S. Federal Reserve's two-day policy-
setting meeting starting on Wednesday and
the change of leadership at the Bank of
Japan this week.
"Investors are ready to chase the market
higher to 13,000 on hopes for easing by the
new leadership next month," said Mizuho's
Miura.

4. STILL UPBEAT
Goldman Sachs remained upbeat on Japanese equities, lifting its 12-month Topix
target to 1,250 from 1,100. "Without a doubt, going 'long Japanese equities' has
become one of the most popular trades among global investors in 2013. This is not to
say, however, that every long-only foreign investor is neutral or overweight Japan,"
Goldman Sachs said in a note. "We estimate that if the underweight gap of 2.8
percentag points of EAFE-benchmark mutual funds were to close, this could imply
roughly $42 billion of potential foreign inflows from this investor segment."
(EAFE=Europe, Australasia, Far East) Foreign investors bought 1.12 trillion yen ($11.7
billion) worth of Japanese shares in the week through March 9, their largest net
purchase since the Ministry of Finance began collecting the data in 2005.
Market participants said that Japan's decision to join Trans-Pacific Partnership (TPP)
membership talks was acting as a long-term catalyst to chase the market higher. "This
is, in our view, clear evidence that Abe is not just about 'buying growth' ahead of the
July elections, but really about a fundamental pro-growth policy change," Jesper Koll,
head of Japanese equity research at JPMorgan, wrote in a note, adding that banks
would be a prime beneficiary if TPP forced a rise in competition, which would mean
that companies would re-invest in buildings and facilities as well as accelerate
mergers and acquisitions.