Nikkei advances as Toyota gains, yen eyed

TOKYO, May 8 (Reuters) The Nikkei rose 1.05 percent on Monday as exporters such as Toyota Motor Corp. gained after U.S.

stocks rose to multi-year highs during Japan's holiday break last week.

But investors were reluctant to push exporting firms significantly higher due to concerns about the stronger yen, analysts said. The Japanese currency touched an eight-month high in early trade on Monday.

Tokyo markets were closed from Wednesday to Friday last week for the Golden Week string of public holidays. During that time, the three main U.S. stock indexes all advanced, with the Dow Jones industrial average finishing at a six-year high.

''After U.S. stocks advanced that much, it is only natural for Japan to see similar gains,'' said Katsuhiko Kodama, senior strategist at Toyo Securities Co Ltd.

Investors were keeping a close eye on the yen, which was helping to limit gains by exporters, he said.

The yen was at 111.85 to the dollar, near its highest level since last September.

''The question now is if the market can maintain these gains,'' Kodama said. ''With the exchange rate at 111 yen, there is good chance that will raise investor concern.'' A stronger yen is a minus for exporters as it reduces profits when earnings from abroad are brought home.

The Nikkei was up 180.41 points at 17,334.18 as of 0100 GMT.

The broader TOPIX index was up 1.20 percent at 1,758.07.

Toyota, the world's most profitable auto maker, was up 0.7 percent at 6,840 yen.

Mobile telecom operator KDDI Corp. rose 2.6 percent to 754,000 yen after brokerage Mizuho Securities raised its target share price to 833,000 yen from 826,000 yen, citing the strength of company's mobile business.

Reuters VJ VP0658