Nikkei extends gains, dividend payments in focus

TOKYO, Mar 20 (Reuters) The Nikkei share average briefly rose more than 2 percent to extend gains on Monday as investors bought companies with high dividends such as Toshiba Corp. and Nikko Cordial Corp.

Mitsubishi Electric Corp. extended gains to add 2.8 percent to 946 yen after it said it would announce revised earings estimates at 0610 GMT, while Softbank Corp. rose on news that it would buy Vodafone Group Plc's Japan unit.

Yosuke Shimizu, head of the investment information center at Monex Inc., said investors were chasing stocks with higher dividends as the deadline for being able to receive the payments before the end of the fiscal year is drawing near.

Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities Inc., said investors were buying stocks on expectations that new money will flow into the stock market when the new fiscal year kicks off in April, pushing up share prices.

''There are hopes that the stock market will rise when the new fiscal year starts,'' he said. ''Compared with other European and U.S. stock markets, which have posted decent gains, the Japanese market has been left behind.'' The Nikkei has risen 3 percent so far this calendar year, while FTSE 100 Index has gained about 7 percent and the Dow Jones industrial average 5 percent.

The benchmark Nikkei was up 1.76 percent, or 287.92 points, at 16,627.65 as of 0453 GMT, climbing above 16,500 for the first time since Feb. 10.

The broader TOPIX index gained 1.47 percent to 1,688.49.

Dividend considerations came into play with Toshiba, an electronics conglomerate which expects to pay its highest full-year dividend in five years, adding 3.3 percent to 668 yen.

Nikko Cordial, Japan's third-biggest securities brokerage, jumped 4.3 percent to 1,998 yen after its plan to more than quadruple its dividend payout for the financial year ending on March 31.

Some seafood companies rose after Japan on Friday confirmed its first case of mad cow disease in a beef animal, while property stocks gained ahead of government land price data due on Thursday.

Nichiro Corp., a seafood processing firm, rose 3.4 percent to 274 yen and its rival Nippon Suisan Kaisha Ltd. leapt 5.3 percent to 558 yen.

Property stocks gained as concerns about rising interest rates subsided after Bank of Japan Governor Toshihiko Fukui said last week it was too soon to think about the timing of an end to the BOJ's policy of keeping short-term interest rates near zero percent.

Japan's largest property developer Mitsui Fudosan Co. Ltd.

rose 2.7 percent to 2,640 yen, and No. 3 Sumitomo Realty&Development Co. Ltd. rose 3.1 percent to 3,000 yen.

Softbank Corp. was up 1.9 percent at 3,200 yen on news that it had agreed to buy Vodafone's struggling Japan unit for 1.8 trillion yen to establish a strong foothold in Japan's billion mobile market.

Moody's Investors Service said on Friday it placed its ratings on Softbank under review for possible upgrade, a move traders said had encouraged some investors to buy the stock.

Reuters KD VP1058