SYDNEY, June 4 (Reuters) - Japanese stocks closed at their highest in more than three months on Thursday, underpinned by a weaker yen and signs of an economic rebound from a coronavirus-led slump, but the rally lost some steam as profit-taking set in.
The benchmark Nikkei average .N225 ended up 0.4% at 22,695.74 points, its highest close since Feb. 21, after flitting between positive and negative territories earlier.
On Wednesday, data showed U.S. private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen, which helped propel all the three major indexes .SPX .DJI .IXIC on Wall Street. .N
In the currency market, the safe-haven yen weakened, with the dollar/yen JPY=EBS hitting a fresh two-month high of 109.10 yen on Thursday and the euro/yen touching EURJPY=EBS a 4-1/2-month high of 122.625 yen overnight. FRX/
As a softer yen boosts Japanese manufacturers' profits made abroad when repatriated, shares of blue-chip exporters were in demand. Toyota Motor 7203.T rose 0.9%, Sony Corp 6758.T added 1.6% and Murata Manufacturing 6981.T gained 2.2%.
The broader Topix .TOPX added 0.3% to 1,603.82, its highest close since Feb. 26, with about two-thirds of the 33 sector sub-indexes on the Tokyo exchange finishing higher.
Financial stocks rose, with insurance .IINSU.T and banking .IBNKS.T among the best-performing sectors on the main bourse. Tokio Marine Holdings 8766.T advanced 2.8% and Mitsubishi UFJ Financial Group (MUFG) 8306.T climbed 1.4%.
NEC Corp 6701.T jumped 3.8% after media reported that British officials have discussed supplies of 5G networking equipment with the Japanese firm and South Korea's Samsung Electronics 005930.KS as part of a bid to develop alternatives to China's Huawei Technologies HWT.UL . 8848.T slumped 13.6% as the apartment development and leasing company cut its earnings estimates for the financial year ended in March due to special losses. It will release a full earnings report on Friday.
Elsewhere, the index of Mothers start-up shares .MTHR dropped 1.3%, having marked its 1-1/2-year peak earlier this week.
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