Nikkei hits 5-year high as techs advance

TOKYO, Marh 29 (Reuters) The Nikkei rose above 16,800 for the first time in 5- years on Wednesday, as shares in Advantest Corp. and other technology firms gained on the yen's fall against the dollar.

After an early decline prompted by a fall in U.S. stocks after the Federal Reserve hinted at further interest rate increases, investors shifted funds in tech firms and others that benefit from a weaker yen.

''We had a bit of shock following the drop in U.S. stocks ...

and there was a bit of selling, but that eventually turned around,'' said Ken Masuda, senior dealer in equities at Shinko Securities.

''Right now the currency is the big factor.'' The Nikkei finished the morning up 0.79 percent at 16,821.29.

Earlier it rose as high as 16,825.31, its highest since Sept.

2000.

The TOPIX index was up 0.59 percent at 1,702.67.

Shares in Advantest, the world's biggest supplier of microchip-testing devices, jumped 5.2 percent to 14,070 yen, becoming the biggest contributor to the Nikkei's advance.

Tokyo Electron Ltd., the world's second-biggest chip equipment maker, rose 3.9 percent to 7,990 yen.

Both companies make the bulk of their sales outside of Japan and therefore benefit from a weaker yen, which increases profits when dollar-denominated earnings are brought home.

The yen fell nearly 1 percent in U.S. trade on Tuesday, booking its biggest one-day fall against the dollar since December, after the Fed move.

The Fed raised interest rates for the 15th time by a quarter percentage point to 4.75 percent. The central bank reiterated that more increases may be needed.

Higher U.S. interest rates are usually met with concern in Tokyo, as they crimp consumer spending in Japan's key export market.

''U.S. stocks reacted to comments there would likely be another rate rise, but to a certain degree that was already factored in by the Tokyo market,'' said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities.

''If the United States raises rates broadly, such as past the 5 percent mark, then we would certainly see some damage in Japan, but with the way things are right now, I don't think it is much of a worry,'' Nakai said.

Elsewhere, shares in Internet portal Yahoo Japan Corp. jumped 6.1 percent to 70,100 yen after sources said it will ally with Sumitomo Mitsui Financial Group to take a stake in the bank's online subsidiary, Japan Net Bank.

Sumitomo Mitsui rose 0.8 percent to 1.25 million yen.

Shares in energy firms also advanced after U.S. crude oil futures hit their the highest level in eight weeks due to concerns about global supply.

Gas and oil explorer Japan Petroleum Exploration Co. Ltd.

gained 3.9 percent to 7,220 yen, while oil producer AOC Holdings Inc. rose 4.6 percent to 2,155 yen.

Some 913 million shares changed hands, slightly above last week's average for the morning session of 910 million shares.

Advancers outpaced decliners 995 to 556.

REUTERS SB KP1021