Tokyo, Oct 18: The Nikkei stock average edged up 0.7 percent on Thursday, driven by high tech shares such as Canon Inc after similar shares rose on Wall Street on expectations of good earnings results.
Elpida Memory rose more than 4 percent after the Nikkei business daily reported that it will shift production of DRAM chips entirely to a process using advanced 300 mm silicon wafers by March 2008, six months ahead of its previous plan.
But rises were likely to be limited by a lack of active buying factors, with foreign investors, who placed net sell orders before the start of trade, wary ahead of Japanese firms' earnings reports that will start to flow in from next week.
''The Nasdaq gained yesterday on high tech shares, and this sentiment is helping to boost similar stocks in Tokyo,'' said Takahiko Murai, a general manager of equities at Nozomi Securities.
''But foreigners remain overall sellers, so there really aren't too many people interested in buying at higher levels.
There also aren't any strong Japan-specific buying factors.'' As of 0105 GMT the Nikkei was up by 0.7 percent or 112.76 points at 17,068.07. The broader TOPIX index was up 1.0 percent at 1,616.50.
A sense that Tokyo stocks were oversold on Wednesday, when both the Nikkei and the TOPIX fell more than 2 percent, was likely to spark buying on dips.
This was seen in bank shares, which were sold heavily for several consecutive sessions earlier this week, with many of Japan's largest banks rising sharply on Thursday such as Mizuho Financial, which was up more than 4 percent.
But market players warned that lingering concerns about credit were likely to limit bank share gains and keep investors skittish.
Enthusiasm over the outlook for U.S. technology profits lifted the Nasdaq index on Wednesday after strong results for bellwethers Intel Corp and Yahoo Inc, but broader market sentiment was dented after the Federal Reserve sounded a note of caution on the economy.
The Fed's Beige Book of anecdotal reports on regional economic conditions showed the pace of economic expansion has slowed since August, and housing markets have continued to weaken. High oil prices, though lower than in previous sessions, continued to weigh.
Canon was up 2.7 percent at 6,100 yen and Tokyo Electron climbed 2 percent to 7,470 yen. Yahoo Japan rose by 2 percent to 52,800 yen. Elpida gained 3.8 percent at 4,100 yen.
Trading house Sojitz Corp was up 2.1 percent at 524 yen, after the Nikkei business daily reported that the trading house will likely post a group pretax profit of about 97 billion yen ($833 million) for the business year to next March, up 8 percent for the year and 5 billion yen above its forecast.
Mizuho Financial was up 4.3 percent at 633,000 yen and Sumitomo Mitsui Financial Group up 3.5 percent at 852,000 yen.