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Japan shares rally as reopening hopes boosts travel, real estate firms

* Train operators, airlines, real estate firms surge

* Vaccination raises hopes of economic reopening

* Carmakers extend gains as investors snatch up value shares

* Last year’s high-flyers crumble; Nitori down 4%

TOKYO, June 2 (Reuters) - Japanese shares ended higher on Wednesday, supported by gains in the hospitality sector as a pickup in vaccination drives boosted economic reopening hopes, while shares of carmakers scaled new highs on stronger global demand.

The Nikkei share average rose 0.46% to close at 28,946.14, while the broader Topix gained 0.84% to 1,942.33.

While Japan last week extended its social restriction measures to later this month, investors are looking beyond, with signs of a pickup in vaccination fuelling their bets on economic reopening.

“Daily vaccination counts are now hitting about 500,000, so we can hope that by mid-July, we could reach a level where new infections should fall because enough number of people will have been vaccinated,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities.

Railway companies were among the best performers, with West Japan Railway jumping 7.7% and East Japan Railway soaring 6.0%.

Airliner ANA Holdings gained 3.2%, while rival Japan Airlines climbed 3.5%.

The real estate sector was another strong performer, with Sumitomo Realty & Development adding 4.3%, while Mitsui Fudosan rose 5.2%.

Real estate investments trusts (REITs) were also in demand, with their index — TSE REIT Index — rising 1.5% to reach its highest level since March last year.

Automakers benefit from hopes of global demand recovery and investors rushed to pick up value shares, which they believe have more potential upside compared to expensive growth shares.

Honda Motor rallied 4.6% to hit a three-year high, while Toyota Motor extended its uptrend to scale a record high with gains of 2.2%.

On the other hand, investors also rotated out of shares that had benefited from windfalls following the pandemic.

Furniture store operator Nitori Holdings lost 4.5% to one-year low while medical equipment maker Sysmex shed 3.7%.

Drugmakers also came under pressure, with Daiichi Sankyo dropping 1.6% and Ono Pharmaceutical down 1.0%, both hitting their lowest levels in more than a year. (Reporting by Hideyuki Sano; Editing by Rashmi Aich)

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