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Nikkei rises 0.7 pct as banks recover, SUMCO gains

Written by: Staff

TOKYO, Mar 17 (Reuters) The Nikkei average rose 0.72 percent on Friday as banks such as Mitsubishi UFJ Financial Group Inc. bounced back and as Mitsui Engineering&Shipbuilding Co. Ltd. rose on news of a large order.

Stocks with bright earnings outlooks, such as silicon wafer maker SUMCO Corp., also rose.

While recent share price falls had made the banking sector look attractive, news that Sumitomo Trust&Banking Co., Japan's fifth-biggest bank, will invest in unlisted Yachiyo Bank also cheered the sector.

''Sumitomo Trust's tie-up with Yachiyo Bank to enhance its retail network in Tokyo suggests that mergers and acquisitions in the sector are moving forward and entering a second stage,'' said Tsuyoshi Segawa, equity strategist at Shinko Securities.

''The first stage was when mergers were necessary for survival,'' he said, referring to the burst of Japan's asset bubble in the late 1990s that left banks saddled with huge loans.

The Nikkei was up 115.84 points at 16,211.85 as of 0102 GMT.

It fell 1.37 percent on Thursday as property stocks took a hit amid concerns about the impact of higher borrowing costs following a rise in the yield of 10-year Japanese government bonds to 19-month highs.

The broader TOPIX index was up 0.63 percent at 1,655.44.

Mitsubishi UFJ Financial Group, the world's biggest banking group by assets, rose 0.6 percent to 1.66 million yen after falling in the previous three sessions.

Sumitomo Trust was up 2.4 percent at 1,221 yen.

Mitsui Engineering rose 6.7 percent to 367 yen after it said on Friday it had won an order to build two chemical plants for around 100 billion yen (6 million) for a large petrochemical project in Saudi Arabia.

SUMCO was up 2.6 percent at 5,560 yen.

The maker of silicon wafers posted an 89 percent jump in annual profit on Thursday, driven by robust demand for its 300-mm wafers, and forecast a rise in profit this year that is largely in line with analysts' expectations.


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