Nikkei rises 1.3 pct, helped by Wall St recovery

TOKYO, Feb 23 (Reuters) Tokyo's Nikkei share average rose 1.31 percent on Thursday as investors, relieved by a pickup in U.S. stocks after data showing tame inflation in the United States, scooped up recently battered stocks such as Advantest Corp Optimism over Japan's economic recovery also kept luring investors to stocks reliant on domestic demand such as Mitsubishi UFJ Financial Group Inc. Data out before the start of trade showed Japanese tertiary sector and all industries activity increased in December, broadly in line with economists' forecasts.

In addition, a Nihon Keizai business daily report that Japan's ''Big Three'' brokerages are all planning to issue record dividend payouts for fiscal 2005/06 helped the sector.

''Banks and brokerages are leading the market higher,'' said Masaharu Sakudo, an adviser at Tachibana Securities.

''The newspaper report was also helpful in reminding investors about buying stocks with higher dividend payments before the fiscal year-end,'' he said.

As of 0113 GMT the Nikkei average was up 206.10 points at 15,987.88 after topping the 16,000 mark for the first time since Friday.

The broader TOPIX index was up 1.61 percent at 1,635.32.

Japan's No. 1 brokerage, Nomura Holdings Inc., rose 3.3 percent to 2,180 yen, second-ranked Daiwa Securities Group Inc.

gained 3.2 percent to 1,362 yen and No. 3 Nikko Cordial Corp. was up 2.4 percent at 1,764 yen.

Mitsubishi UFJ, the world's biggest banking group by assets, rose 3.1 percent to 1.64 million yen, helping send the banking sector subindex IBNKS.up 2.4 percent.

Shares in Advantest, the world's biggest chip-testing maker, were up 2.3 percent at 13,030 yen, reversing a 3.5 percent fall the previous day. Semiconductor stocks took a hit on Wednesday after Citigroup's downgrading on the semiconductor sector and semiconductor equipment industry group.

Sony Corp. rose 2.6 percent to 5,610 yen.

Sony said on Wednesday it was scrapping 45 advisers' positions as part of its restructuring, leading to the departure of former president Kunitake Ando and other well-known names in its old guard.

Japanese trade data, released before the opening, had little impact on share prices.

The data showed Japan logged a monthly trade deficit for the first time in five years in January as high oil prices boosted imports and the Lunar New Year reduced shipments to Asia, now Japan's largest export market. But the fall to a deficit was widely expected.

Concerns about inflation and the outlook for higher interest rates in the United States had been casting a shadow over U.S.

stocks, making global investors reluctant to pour too much money into riskier assets such as Japanese stocks.

REUTERS PDS VP0716