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SoftBank Group, Yasukawa vastly outperform rest of market

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SoftBank Group to buy ABB's robotics business

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Nikkei hit record peak on Tuesday with fiscal dove

Takaichi set

to become premier

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Analysts warn of potential for Nikkei volatility amid

signs of

overheating

By Kevin Buckland

TOKYO, Oct 9 (Reuters) - Japan's Nikkei share average

rallied towards a fresh high on Thursday, as index heavyweight

SoftBank Group surged more than 13% as investors bought

into its vision of artificial intelligence-powered robots.

Robot manufacturer Yaskawa Electric ( YASKF ) also shot up as

much as 10.5%, with those two stocks vastly outperforming all

others on the benchmark index.

The tech-heavy Nikkei climbed as much as 1.6% to

48,481.09, just below Tuesday's all-time peak of 48,527.33,

before entering the midday recess at 48,405.93.

SoftBank alone added 506 points to the Nikkei's 671-point

rally.

The broader Topix, by contrast, gained a much more

muted 0.3% to 3,244.15.

SoftBank said late in Wednesday's trading session that it

had bought the robotics business of Switzerland's ABB,

taking forward the Japanese startup investor's strategy to fuse

robotics and AI, although it was largely ignored by the market

initially.

"The moves in SoftBank and Yaskawa are so big compared to

everything else, it's easy to think this is a delayed reaction,"

said Masahiro Ichikawa, chief market strategist at Sumitomo

Mitsui DS Asset Management. "It feels a little overdone."

Fellow robotics company Fanuc ( FANUF ), by contrast, was up

a relatively small 2.2%.

The Nikkei may be ripe for a pullback, with a common gauge

known as the relative strength index (RSI) at 77, well above the

70 level generally cited as an overheating indicator.

The auto sector was notably the worst performer

among the Tokyo Stock Exchange's 33 industry groups, after

reaching the highest level since the middle of last year on

Wednesday.

The sector slid 1.7% despite persistent weakness in the yen

, which buoys the value of overseas sales. Toyota ( TM )

dropped 2.4%.

Japanese stocks were supercharged at the start of the week

after fiscal dove Sanae Takaichi was elected as the head of the

ruling Liberal Democratic Party, setting her up to become the

country's next prime minister.

However, her ascension is not assured, with her right-wing

politics creating friction with coalition partner Komeito, and

the government holding a minority of seats in both houses of

parliament.

The market could see additional volatility with the earnings

season unofficially kicking off with Uniqlo parent Fast

Retailing's ( FRCOF ) results later on Thursday. The stock was

last up 0.9%.

Daiwa Securities strategist Kenji Abe, however, forecast the

Nikkei can rally to 50,000 by the end of Japan's fiscal year in

March.

"Earnings are improving," he said. "The Nikkei can rise

further."

At the same time, "politics are important, and can inject

near-term volatility," he said. "The market has high

expectations for Takaichi's policies."