Nikkei jumps, books first weekly gain in six weeks

TOKYO, June 16 (Reuters) - The Nikkei average rose 2.82 percent on Friday and booked its first weekly gain in six weeks, as a sharp rebound on Wall Street and easing concerns about a rise in U.S. interest rates spurred buying in Canon Inc. and other recently battered stocks.

Toyota Motor Corp. and other auto makers gained ground after falling since early May on concerns about an economic slowdown in the United States, their key market.

Analysts said the market was getting a bounce after the Nikkei fell nearly 20 percent from its April peak.

''The market has fallen to a level where technical rebounds are due,'' said Kenji Kobata, managing director in research department Ace Securities Co. Ltd.

The Nikkei share average rose 408.58 points to 14,879.34. On the week, the benchmark was up 0.9 percent, its first weekly gain since the first week of May. Friday was also the average's biggest one-day percentage gain since Feb. 21.

The capital-weighted TOPIX index advanced 3.28 percent to 1,534.71. The TOPIX posted its biggest one-day percentage gain in nearly 4 years.

Tomomi Yamashita, a senior fund manager at Shinkin Asset Management Co. Ltd., said traders may now shift their focus to corporate earnings from U.S. inflation fears.

''If investors begin to pay more attention to earnings, the market may rise further,'' he said.

Some stocks already moved on profit prospects.

Electronics conglomerate Toshiba Corp. gained 6.5 percent to 724 yen, and digital camera maker Nikon Corp. rose 5 percent to 1,995 yen after Merrill Lynch upgraded both stocks to ''buy'' from ''neutral'', citing their profit growth.

Likewise, Elpida Memory Inc. jumped 8.3 percent to 4,850 yen after Mitsubishi UFJ Securities in a report on Friday upgraded the stock to ''1'' from ''2''.

Mitsubishi Corp. extended its gains after Japan's biggest trading company told Reuters that it aims for a group net profit of 450 billion yen in the year to March 2009, up 22 percent from this year's target. The stock ended up 6.4 percent to 2,250 yen.

In the auto sector, Toyota Motor rose 3.7 percent to 5,840 yen, after hitting its lowest point of the year on Wednesday.

Honda Motor Co. Ltd. added 3.6 percent to 7,150 yen.

U.S. stocks rose on Thursday, with investors cheered by comments from Federal Reserve Chairman Ben Bernanke that inflation expectations had fallen back somewhat.

Other blue-chip shares also rose, with Sony Corp. up 4.7 percent to 4,940 yen.

Sharp gains in the market lifted brokerage shares, with Nomura Holdings Inc. jumping 6.6 percent to 2,185 yen.

Toray Industries Inc. surged 6.4 percent to 953 yen after the company said it had developed a way to mass-produce carbon fibre composite.

UPSIDE LIMITED Hiroaki Kuramochi, managing director at Bear Stearns (Japan) Ltd., said there would be some political uncertainty in Japan ahead of September when Prime Minister Junichiro Koizumi is expected to step down.

Some investors are also concerned about Japan's financial system after high-profile fund manager Yoshiaki Murakami was arrested on suspicion of insider trading and Bank of Japan Governor Toshihiko Fukui came under fire for his involvement in the fund.

Analysts said a possible rise in Japanese interest rates is also a concern as a Reuters survey showed on Friday that Japanese financial markets still expect the BOJ to end its zero-rate policy as early as July despite the recent slide in stocks.

Yutaka Shiraki, a senior strategist at Mitsubishi UFJ Securities Co. Ltd, said the Japanese and U.S. economies are likely to slow down this year, though it is unclear how severe the slowdown will be.

''Corporations are hiring, and raw materials costs are rising, pushing up fixed costs ... the environment is less friendly for companies,'' he said.

Trade was active, with 2.12 billion shares changing hands on the Tokyo market's first section, exceeding last year's daily average of 2.07 billion shares. Advancers beat decliners by a ratio of nearly 13 to 1.

REUTERS DKS SND1444