Nikkei rebounds to biggest 1-day gain since March

TOKYO, May 24 (Reuters) The Nikkei average posted its biggest one-day percentage gain in more than two months on Wednesday, rising 1.97 percent as shares of Toyota Motor Corp. and other leading firms rebounded as investors bet stock prices had fallen too far.

Commodities firms also advanced, with Sumitomo Metal Mining Co.

Ltd. jumping more than 6 percent after copper posted its largest daily gain on record on Tuesday.

Investors were buying back shares of large-cap leaders such as Toyota on the perception that stock prices had fallen far enough in recent sessions, said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

''The market was oversold,'' he said.

''Except for the big banks, all of the largest cap stocks had been oversold and I think we saw some bargain hunting.... I think the market had no reason to fall as sharply as it did on Monday and Tuesday.'' The Nikkei finished 308 points higher at 15,907.20, posting its biggest one-day percentage gain since March 9. It fell more than 500 points in the previous two sessions, and on Tuesday posted its lowest finish in three months.

The TOPIX index gained 1.69 percent to 1,606.01.

Toyota climbed 3.2 percent to 6,140 yen. Shares of the world's most profitable auto maker slid to a four-month low in the previous session.

Chip-gear maker Tokyo Electron Ltd. rose for the first time in three sessions, adding 4.2 percent to 8,460 yen and becoming the biggest contributor to the Nikkei's rise.

Canon Inc. gained 2.1 percent to 8,130 yen.

Shares of Sumitomo Mitsui Financial Group Inc. added 1.8 percent to 1.16 million yen after Japan's third-largest bank posted an annual profit of .15 billion on Tuesday, recovering from heavy losses a year earlier.

THE FOREIGN FACTOR Sentiment was boosted after data released before the start of trade showed that foreign brokerages had placed more buying orders than selling orders, participants said.

That was only the fifth time so far this month that foreign brokerages placed more pre-open buy orders than sell orders.

''When foreign brokerages returned as net buyers before the start of trade ... that might have forced some investors who had been selling stocks to cover their short positions,'' said Daiwa SB's Ogawa.

Sumitomo Metal Mining gained 6.4 percent to 1,513 yen after copper surged more than 11 percent on Tuesday, marking the metal's biggest daily gain on record.

Fellow smelter Mitsubishi Materials Corp. advanced 4 percent to 518 yen. Metal manufacturer Dowa Mining Co. Ltd. rose 5.2 percent to 1,080 yen.

U.S. BLUES Concerns the world's largest stock market may continue to founder are still likely to weigh on Japanese equities, said Takashi Ushio, head of the investment strategy division at Marusan Securities.

''The main cause of the weakness in global markets at the moment is the fact the U.S. can't stop sliding,'' he said.

''Unless the U.S. improves, investors won't be able to feel confident here.'' Shares of Oki Electric Industry Co. Ltd. dropped 5.1 percent to 297 yen after the electronics maker said it would offer 30 billion yen in unsecured convertible bonds with stock warrants, prompting brokerage Nikko Citigroup to lower its rating and its target share price due to dilution concerns.

The brokerage cut its rating on the stock to ''Hold/High Risk'' from ''Buy/High Risk'' and lowered its target share price by 82 yen, to 318 yen.

Shares of Juki Corp. fell 14.9 percent, their daily limit of 100 yen, to 571 yen after the maker of industrial sewing machines said its group recurring profit would fall nearly 15 percent this year due to higher research and development costs.

Leopalace21 Corp. gained 2.8 percent to 3,650 yen after the real estate firm on Tuesday announced the resignation of its president, Yusuke Miyama.

The company said last week it would delay its latest earnings results and would restate earnings for the past five years after an internal investigation found that Miyama had improperly borrowed from tenants-cooperative funds.

Trade was relatively active, with 2.04 billion shares changing hands on Tokyo exchange's first section, not far off last year's daily average of 2.07 billion.

Advancing shares beat decliners by a ratio of nearly 2 to 1.

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