TOKYO, Oct 3 (Reuters) Japan's Nikkei average ended Wednesday at its highest level in nine weeks, led by Nikko Cordial Corp and rival brokerage houses after Citigroup said it would buy out minority shareholders in Nikko Cordial.
The benchmark has recovered 13 percent since its year-low hit in August as subprimes fears hit the global markets, but is still off 6 percent from its year-high logged in late February. So far this year, it is below 0.2 percent.
Buying also spread to real estate companies and other laggards as the market mood largely improved on the financial companies' advance, said Hiroyuki Fukunaga, chief strategist at Rakuten Securities.
''Investor appetite seems to have returned, and the uptrend might have started in earnest. I can relax and watch the market today,'' he said.
A jump in Softbank Corp, which is seen as a barometer of retail investor sentiment, indicates those investors, who represent more than 20 percent of the overall trade, are also turning bullish, Fukunaga said.
The Nikkei average rose 0.9 percent or 153.11 points to finish at 17,199.89, the highest close since July 31.
The broader TOPIX climbed 1.5 percent or 24.22 points to 1,664.01, its highest finish since Aug. 9.
But Takashi Kamiya, chief economist at T&D Asset Management, said he is concerned about investors' low risk tolerance, reflected in a slow rebound in the equities markets, despite healthy money conditions.
''Investors are worried about the possibility of a recession in the United States and an inflation possibility in emerging countries that have led the growth of the global economy,'' Kamiya said.
Trade picked up, with 2.2 billion shares changing hands on the Tokyo exchange's first section, compared with last week's daily average of 1.9 billion.
Advancing stocks beat declining ones by a ratio of more than three to one.
FINANCIALS PICK UP STEAM Nikko Cordial jumped 13.7 percent to 1,662 yen, its daily limit, after Citigroup said it would buy out minority shareholders in the Japanese brokerage by giving Citigroup shares with an expected value of 1,700 yen per Nikko Cordial share, a 16 percent premium to Tuesday's closing price.
The news also lifted shares of its rivals. Nomura Holdings Inc climbed 4 percent to 2,090 yen and Daiwa Securities Group Inc gained 5.8 percent to 1,178 yen.
Bank shares also soared with Mizuho Financial Group up 4.5 percent at 691,000 yen, while Mitsubishi UFJ Financial Group advanced 4 percent to 1,158 yen and Sumitomo Mitsui Financial Group added 3.5 percent to 947,000 yen.
Property shares rose with Mitsubishi Estate Co Ltd up 2.7 percent to 3,450 yen. Sumitomo Realty&Development climbed 2.4 percent to 4,200 yen and Mitsui Fudosan Co Ltd rose 1.9 percent to 3,310 yen.
Shares of Softbank powered 3.5 percent higher to 2,230 yen.
Elsewhere, shares of JFE Holdings Inc climbed 3.1 percent to 8,370 yen and Toshiba Corp rose 2.4 percent to 1,091 yen on news that JFE will supply industrial electronics group Toshiba with steam turbines for power plants.
Separately, JFE's steel unit said the company is in talks to raise the price of thick steel plates used in shipbuilding and construction by 15 percent.
Among issues that fell, Matsushita Electric Industrial Co dropped 2.5 percent to 2,125 yen after Morgan Stanley said a fire at its lithium-ion battery plant in Japan might affect future orders.
Shimamura Co lost 9.9 percent to 10,150 yen after UBS and Credit Suisse lowered their ratings on the clothing store chain after its first-half earnings fell short of the company's forecasts.
REUTERS KR DS1254